13 The Dakota Corporation had a 2015 taxable Income of $13,000,000 from operatio

Question

13 The Dakota Corporation had a 2015 taxable Income of $13,000,000 from operations after all operating costs but before() interest charges of $3,100,000, (2) dividends received of $250,000, (3) dividends paid of (4) Income taxes 3.5 points a. Use the tax schedule in Table 2.3 to calculate Dakota's Income tax lability. (Round your answer to the nearest dollar amount.) ax liability eBook b. What are Dakota's average and marginal tax rates on taxable income? (Round your answers to 2 declmal places) Hint Average tax rate Marginal tax rate References

Explanation / Answer

This income falls under $335,001 - 10,000,000 category

Income Tax Liability = 113,900 + .34 * (9,975,000 - 335,001)

= 113,900 + 3,277,600 = 3,391,500

Average Tax Rate = 3,391,500 / 9,975,000 = 34%

Marginal Tax Rate = 34% on the last dollar charged

Income after Operating Cost 13000000 Less: Interest Expense 3100000 Plus: Taxable Di)vidend (30% of Dividend received 75000 Taxable Income 9975000

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