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Credit rating agency

Tax issues and retirement planning

Subject: 
Economics
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Government bonds
Debt
Government debt
Local government in the United States
Municipal bond
economics
bonds
Bond
Public finance
Corporate bond
United States Treasury security
Credit rating agency
Business

M2A2 Eric Mackey Tax issues associated with Financial Planning Case Study: Bill Smith, a manager of a restaurant/bar in Los Angeles, is in the 25% marginal tax bracket and pays an additional 5% in taxes to the state of California. Bill has $20,000 invested in corporate bonds which is currently earning an average annual return of 7.5%. Additionally, Bill also has another $20,000 invested in municipal bonds from the city of Los Angeles that are being used to redevelop depressed areas downtown. These bonds pay an average return of 5.4%. Assume that in both cases, Bill earns the same returns as calculated on both the corporate and municipal bonds each year for the next 15 years. Area?s addressed: What is the after-tax return on Bill?s corporate bonds for the current year? $1,050
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