1. Susan received $45,000 from her ex-husband Brian in 2013. According to their divorce settlement, Brian should pay $45,000 to Susan every year until their son Joshua turns 18, then the amount will be reduced to $25,000. Which of the following statements regarding income tax is true?
Susan should pay income tax on $25,000, and Brian should pay income tax on $20,000.
Susan should pay income tax on $45,000.
Brian should pay income tax on $25,000, and Susan should pay income tax on $20,000.
Brian should pay income tax on $45,000.
2. Please calculate the after-tax return on the following securities for a company that is in the 30% federal tax bracket. Assume the tax rate on dividends is 15%.
A. Treasury bonds at 5%
B. Corporate bonds at 8.25%
C. Municipal bonds at 7%
D. Preferred stock at 6.5%