1. Chris’ expected pre-tax bonus is $20,000. Chris earns a base salary of $30,000. Chris files as a single taxpayer with no itemized deductions. (Use the 2014 standard deduction and one personal exemption to figure his taxable income and the 2014 single tax rate schedule to figure his tax.) What is Chris’s expected ATCF from the bonus?
2. Dave asks your advice about whether to continue a mail-order part of his business. Mail-order transactions generate extra cash sales of $60,000. These transactions require deductible cash expenses of $30,000, non-deductible cash expenses of $9,000, and deductible non-cash expenses of $12,000. What is Dave's after-tax cash flow from these operations if his marginal tax rate is 30%?