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Based only on the information provided for each scenario, determine whether Eddy or Scott will benefit more from using the timing strategy and why there will be a benefit to that person.
Exhibit 3.1.
a. Eddy has a 40% tax rate. Scott has a 30% tax rate.
b. Eddy and Scott each have a 40% tax rate. Eddy has $10,000 of income that could be deferred; Scott has $20,000 of income that could be shifted.
c. Eddy and Scott each have a 40% tax rate and $20,000 of income that could be deferred. Eddy's after-tax rate of return is 8%. Scott's after-tax rate of return is 10%.
d. Eddy and Scott each have a 40% tax rate, $20,000 of income that could be deferred, and an after-tax rate of return of 10%. Eddy can defer income up to 3 years. Scott can defer income up to 2 years.
Singapore
An island city-state off southern Malaysia, known for its global financial center, multicultural population, and strict regulations.
Thailand
A Southeast Asian country known for its tropical beaches, opulent royal palaces, ancient ruins, and ornate temples displaying figures of Buddha.
Interdependent Self
A self that is relatively dependent on social relations and has more fuzzy boundaries.
Social Relations
The interactions between individuals and groups within a society, encompassing various forms of relationships and social structures.
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