Based Only on the Information Provided for Each Scenario, Determine

question 14

Essay

Based only on the information provided for each scenario, determine whether Kristi or Cindy will benefit more from using the timing strategy and why there will be a benefit to that person. Use Exhibit 3.1. (Round discount factor(s)to three decimal places.)a. Kristi has a 40 percent tax rate and can defer $32,000 of income. Cindy has a 30 percent tax rate and can defer $42,000 of income. b. Kristy has a 30 percent tax rate and a 9 percent after-tax rate of return and can defer $37,000 of income for three years. Cindy has a 40 percent tax rate and an 7 percent after-tax rate of return and can defer $32,000 of income for four years.

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Definitions:

Ascription

Ascription involves assigning status to an individual or group, often based on characteristics like age, gender, or ethnicity, rather than personal achievement.

Achievement

The accomplishment of a goal or the attainment of success in a particular area, often recognized through tangible rewards or social acknowledgment.

Income

Income is the financial gain or money received by an individual or household from work, investments, or other sources, often measured over a specific period of time.

Wealth

An abundance of valuable resources or material possessions, or the control over such assets.