Based Only on the Information Provided for Each Scenario, Determine

question 91

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.
a. Kristi has a 40% tax rate and can defer $20,000 of income. Cindy has a 30% tax rate and can defer $30,000 of income.
b. Kristy has a 30% tax rate, a 10% after-tax rate of return, and can defer $25,000 of income for three years. Cindy has a 40% tax rate, an 8% after-tax rate of return, and can defer $20,000 of income for four years.

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Definitions:

Thalamus

A structure within the brain that acts as a relay station for sensory and motor signals to the cerebral cortex.

Vasoconstriction

The narrowing of blood vessels caused by contraction of the muscular wall of the vessels, which increases blood pressure.

Medulla Oblongata

The lower portion of the brainstem, which controls vital bodily functions such as respiration, heart rate, and blood pressure.

Hypothalamus

This part of the brain, positioned below the thalamus, plays a pivotal role in controlling the autonomic nervous system and pituitary gland activity, thereby regulating essential homeostatic functions including body temperature, thirst, hunger, and other equilibrium-maintaining systems.