Question

Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $123,000. 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 $7,000. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent.

Quantitative Problem: Andrews Corporation has income from operations of $252,000. In addition, it received interest income of $25,200 and received dividend income of $29,500 from another corporation. Finally, it paid $12,200 of interest income to its bondholders and paid $43,900 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 dollar.

Answer 1

I	Jenna-Single Tax Player
		Wages	$    123,000
		Add: Long term capital gain taxable at special rate of 15%	$        7,500
		Less: Standard Deduction	$        6,100
		Taxable Income	$    124,400
				Tax
		Taxable at normal rate	$    116,900	$       26,025	17891.25+28%*(116900-87850)
		Taxable at special rate(15%)	$        7,500	1,125.00	(7500 x 15%)
			$    124,400	$       27,150
		So Jenna Owed $27,150 in taxes including capital gain tax
	II
		Computation of firms taxable income-Andrews Corporation
		Operational income	$252,000
		Add: interest income	$25,200
		Add dividend income (29,500*30%)	$8,850
		Less: interest paid	($12,000)
		Taxable income	$274,050
		Federal tax (21% * $274050)	$57,551
		Note dividend received only 30% added 70% is deducted from taxable income .