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My answer is (D).

In reading the sentence (i.e. option A), I found a fatal error: "it“ cannot logically be the agent who ”calculates the tax". Armed with such revelation, I can immediately eliminate all but (C) (and already started to wonder why the split is so extreme.) Upon careful reading of (C), I realize that it also use "when calculating the tax" with a logical subject "it".

So, this question writer totally disregards the compatibility between sentence subject and participles used as modifier. I have to ignore this issue to re-examine all options, after such a thrill ride.

(A) "annual" and "at the end of the year" is redundant. On the other hand, should the annual tax is due in the middle of the year, we can argue that "annual" and "in the middle of the year" may not be redundant.

(B) "if" can only be used to introduce a conditional subordinate clause in GMAT. Must use "whether" here to introduce a noun clause.

(C) "whether or not" is redundant. "whether" suffices.

(E) "whether ... or not" is redundant. "whether" suffices.
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At first glance, I couldn't find anything wrong with (A). Only when I saw (B), It struck me that the annual keyword is missing there.
Thus, (A) can be rejected as both "annual" and "end of the year" makes it redundant.

On the GMAT, use “if” in a conditional sentence to show that one thing will happen if something else happens. Use “whether” to show that two alternatives are possible.
Hence, (B) can be eliminated.

Also, "whether or not" is redundant. So, (C) and (E) are gone too.

(D) is our answer.
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A. When calculating the annual tax deducted at the end of the year, it is sometimes difficult to predict whether an income will surpass a certain bracket
Annual and end of the year- Repetition

B. When calculating the tax deducted at the end of the year, it is sometimes difficult to predict if an income will surpass a certain bracket
if can only be used for conditions in GMAT Land

C. It is sometimes difficult to predict whether or not an income will surpass a certain bracket when calculating the tax deducted annually
whether or not : Not the correct way

D. When calculating the tax deducted at the year's end, it is sometimes difficult to predict whether an income will surpass a certain bracket
All OK
E. When calculating the tax deducted at the end of the year, it is sometimes difficult to predict whether an income will surpass a certain bracket or not
whether or not : Not the correct way
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