This year, Mesa Inc.’s before-tax income was $10,814,500. It paid $494,000 income tax to Minnesota and...

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This year, Mesa Inc.’s before-tax income was $10,814,500. It paid $494,000 income tax to Minnesota and...

This year, Mesa Inc.’s before-tax income was $10,814,500. It paid $494,000 income tax to Minnesota and $430,000 income tax to Illinois.

Compute Mesa’s federal income tax.
What is Mesa’s combined tax rate on its income?

business accounting

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Answer 1

Answer #1

Part A

Mesa’s federal income tax

$2077005

Income before tax	10814500
Deduction for state income tax (494000+430000)	(924000)
Taxable income for federal purposes	9890500
Tax rate	21%
Federal income tax	$2077005

Part B

Mesa’s combined tax rate

27.75%

Mesa’s combined tax rate = Total tax / Income before tax = (2077005+924000)/10814500 = 27.75%

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Answer 2

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