Analyzing Tax Impacts
There is a five-step procedure for analyzing the tax impacts on the investment:
1 Determine the investment’s tax classification.
2 Determine the investor’s tax status (i.e., form of business organization).
3 Estimate the investor’s marginal tax rate.
4 Forecast the taxable income resulting from operations and from the disposition (sale) of the investment
5 Using the investor’s marginal tax rate and the taxable income figures, compute the estimated taxes.
