Leonardo, Who Is Married but Files Separately, Earns $63,000 of Taxable

question 102

Multiple Choice

Leonardo, who is married but files separately, earns $63,000 of taxable income. He also has $16,400 in city of Tulsa bonds. His wife, Theresa, earns $51,400 of taxable income. If Leonardo instead had $31,400 of additional tax deductions for 2020, his marginal tax rate on the deductions would be: (Use tax rate schedule.) (Round your final answer to two decimal places.)

• A)9)28 percent
• B)20.90 percent
• C)19.28 percent
• D)21.28 percent
• E)None of the choices are correct

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Definitions:

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing factors such as reputation, brand, and customer relationships.

Entity Method

A consolidation approach where investments are recorded at the purchase cost, adjusted for the parent company's share in the subsidiary's post-acquisition profits or losses.

Gross Margin

A company's revenue minus its cost of goods sold, divided by revenue, expressed as a percentage, indicating the percentage of revenue that exceeds the cost of goods sold.

Inventory

Inventory comprises the goods and materials a business holds for the purpose of resale or production.