Question

2018 Individeal Tax Rates Single Individuals You Pay This Pls This Percentage Average Tax If Your Taxable Inceme Is Ameant on the on the Excess over the Base (Marginel Rate) 10.0% Rate at Base of the Bracket Top of Bracket 30.0% Up to $9,525 0 9,525 3,700 952.50 12.0 15 3,700-42.500 4453.50 22.0 17.1 s82,500 $157.500 14,089.50 24.0 20.4 $157,500-$200,000 32,089.50 45,60.50 32.0 22.8 $200,000-$500,000 35.0 301 37.0 Over $500,000 150,689.50 37.0 standard deduction for Individual: $12,000 Married Couples Filing Joint Returns You Pay This Plus This Percentage Amount on the on the Excess over the Average Tax If Your Taxable Rate et Income Is Base of the Bracket Base (Marginel Rate) Top of Bracket Up to $19,050 so 10.0% 0.0% 19,050-$77,400 1905.00 120 11.5 $77,400-$165.000 17.1 8,907.00 22.0 $165,000-$315,000 2179.00 24.0 20.4 $315,000 $400,000 64179.00 32.0 228 1.379.00 s400,000-$600,.000 35.0 26.9 370 Over s600,000 161379.00 37.0 Standard deduction for married couples filing jointly: $24,000 Quantitative Problem: Jenna is a single tapayer During 2018, she eamed wapes of $138,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for Sive years for a net profit of $7,500. Hom much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent Coperate Corporations earm most of ehelr income from operations: hewever, they may also receive interest and dividend income. t Income is taxed as ordinary income: however ncome is taced more favorably. 50% of drecelved is excuded from taxable inceme, while the remaining 50% is taved at the ordinary tax rate. For businesses. payments are regarded as an epense so they are tax deductible; heweve paments are not tax deductble. Consequen our tax system encourapes ancing over financing Depreciation expense is tax deductible, se the larger the depreciation, the he taable income, the the taxes, and the the firm's operating cash fow Quantitative Problem: Andrews Corperatien has income from operations of $253,000. In addition, R recelved interest income of $25,300 and received dividend income of $32,300 from another cerporation. Finaly, it paid $9,200 ef interest income to ts bendholders and paid $42,400 of dividends to its common stockholders. The firm's federal tax rate is 21% what is the f's federal income tax? Do net round intermediate caloulatiens. Round your ansner to the nearest cent

2018 Individual Tax Rates

Single Individuals

If Your Taxable Income Is

You Pay This

Amount on the

Base of the Bracket

Plus This Percentage

on the Excess over the

Base (Marginal Rate)

Average Tax

Rate at

Top of Bracket

Up to $9,525

$0

10.0

%

10.0

%

$9,525 - $38,700

952.50

12.0

11.5

$38,700 - $82,500

4,453.50

22.0

17.1

$82,500 - $157,500

14,089.50

24.0

20.4

$157,500 - $200,000

32,089.50

32.0

22.8

$200,000 - $500,000

45,689.50

35.0

30.1

Over $500,000

150,689.50

37.0

37.0

Standard deduction for individual: $12,000

Married Couples Filing Joint Returns

If Your Taxable Income Is

You Pay This

Amount on the

Base of the Bracket

Plus This Percentage

on the Excess over the

Base (Marginal Rate)

Average Tax

Rate at

Top of Bracket

Up to $19,050

$0

10.0

%

10.0

%

$19,050 - $77,400

1,905.00

12.0

11.5

$77,400 - $165,000

8,907.00

22.0

17.1

$165,000 - $315,000

28,179.00

24.0

20.4

$315,000 - $400,000

64,179.00

32.0

22.8

$400,000 - $600,000

91,379.00

35.0

26.9

Over $600,000

161,379.00

37.0

37.0

Standard deduction for married couples filing jointly: $24,000

Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $138,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $7,500. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent.

$

Corporate

Corporations earn most of their income from operations; however, they may also receive interest and dividend income. income is taxed as ordinary income; however, income is taxed more favorably. 50% of received is excluded from taxable income, while the remaining 50% is taxed at the ordinary tax rate. For businesses, payments are regarded as an expense so they are tax deductible; however, payments are not tax deductible. Consequently, our tax system encourages financing over financing. Depreciation expense is tax deductible, so the larger the depreciation, the the taxable income, the the taxes, and the the firm's operating cash flow.

Quantitative Problem: Andrews Corporation has income from operations of $253,000. In addition, it received interest income of $25,300 and received dividend income of $32,300 from another corporation. Finally, it paid $9,200 of interest income to its bondholders and paid $42,400 of dividends to its common stockholders. The firm's federal tax rate is 21%. What is the firm's federal income tax? Do not round intermediate calculations. Round your answer to the nearest cent.

$

Answer 1

1)
Earned income from work	$                          138,000.00
Long-term gain	$                              7,500.00
Gross Income	$                          145,500.00
Less:Standard Deduction	$                           (12,000.00)
Taxable Income	$                          133,500.00
Tax Liability
Regular Tax on ($133,500- $7500 L/T Capital Gain)	$                          126,000.00
Regular Tax = 14089.50+ (126000 - 82500) x 24%	$                            24,529.50
15% tax on long term capital gain (15% x $7500)	$                              1,125.00
Jenna owe to the IRS for taxes	$                            25,654.50
2)
Corporations earn most of their income from operations; however, they may also receive interest and dividend income.Interest income is taxed as ordinary income; however, dividend income is taxed more favorably. 70% of dividends received is excluded from taxable income, while the remaining 30% is taxed at the ordinary tax rate. For businesses, interest payments are regarded as an expense so they are tax deductible; however, dividend payments are not tax deductible. Consequently, our tax system encouragesdebt financing over equity financing. Depreciation expense is tax deductible, so the larger the depreciation, thelower the taxable income, thelower the taxes, and the higher the firm's operating cash flow
3)
Income from operations	253000
Interest Income	25300
Taxable Dividend Income = $32300 x 30%	9690
Less: Interest Expenses	-9200
Taxable income	278790
Tax owe by corporation = 278790 x  21%	58545.9
Dividends paid to stockholders are not tax deductible