Leonardo, Who Is Married but Files Separately, Earns $80,000 of Taxable

question 26

Multiple Choice

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo earned an additional $30,000 of taxable income this year, what would be the marginal tax rate on the extra income for 2020? (Use tax rate schedule.) (Round your final answer to two decimal places.)

• A)22.00 percent
• B)18.81 percent
• C)24.00 percent
• D)23.62 percent
• E)None of the choices are correct

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Definitions:

GAAP

A set of widely adhered-to accounting norms and guidelines for financial statements.

EPS Information

Earnings Per Share; a financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock.

Operating Activities

The portion of a company's cash flow statement that details the cash generated or used in the company's primary business operations, excluding investing and financing activities.

Depreciation Expense

The allocated amount of an asset's cost expensed over its useful life to account for the decline in its value due to wear and tear.