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Using the same example, for kontol a pre-tax yield of.044 which has a rate to.25 (25%), your equation is (1.00 ~.25) x.044 =.033, for an after tax yield of 3.30%. This is determined by multiplying the after tax yield by 100, in order to express it like a percentage. What The character does not matter nearly as much as what the internal Revenue Service thinks, and the IRS position is crystal clear: Tips are taxable income.
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