Question

Hunt Taxidermy, Inc. is concerned about the taxes paid by the company in 2018. In addition to $7.5 million of taxable income, the firm received $614,000 of interest on state-issued bonds and $340,000 of dividends on common stock it owns in Oakdale Fashions, Inc. (Use Table 2.3.)

Plus this Percentage on Anything Over the Base table 2.3 Corporate Tax Rates as of 2015 Pay this Amount Taxable income on Base Income $0-$50,000 0 $50,001-$75,000 7,500 $75,001-$100,000 13,750 $100,001-$335,000 22,250 $335,001-$10,000,000 113,900 $10,000,001-$15,000,000 3,400,000 $15,000,001-$18,333,333 5,150,000 Over $18,333,333 6,416,667 15% 25 34 39 34 35 38

Calculate Tax Liability:

Calculate the Average Tax Rate:

Calculate Marginal Tax Rate:

Answer 1

THE HUNT TAXIDERMY,INC TOTAL INCOME FOR THE YEAR 2018

TAXABLE INCOME = $7500000

INTEREST ON BONDS =$614000

DIVIDENDS =$340000

TOTAL TAXABLE INCOME =8454000

THE TOTAL TAX LIABILITY OF COMPANY

AMOUNT	% OF TAX	%OF TAX ON BASE	TOTAL
50000	15%	7500	7500
25000	25%	6250	6250
25000	34%	8500	8500
235000	39%	91650	91650
8119000	34%	2760460	2760460
TOTAL TAX			2874360

TOTAL TAX LAIBILITY = $2874360

AVERAGE TAX RATE = TOTAL TAX LIABILTY   *100

TOTAL INCOME

= 2874360 *100

8454000

=34%

MARGINAL TAX RATE = CHANGE IN TAX PAID *100

CHANGE IN INCOME

=34%