McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 40

Paris participates in her employer's nonqualified deferred compensation plan.For 2011, she is deferring 10 percent of her $320,000 annual salary.Assuming this is her only source of income and her marginal income tax rate is 30 percent, how much does deferring Paris' income save her employer (after-taxes) in 2011? Paris's employer's marginal tax rate is 35 percent (ignore payroll taxes).