Corporate income tax) Sales for J. P. Hulett Inc. during the past year amounted

Question

Corporate income tax) Sales for J. P. Hulett Inc. during the past year amounted to $4.1 million. Gross profits totaled $1.04 million, and operating and depreciation expenses were $493,000 and $341,000, respectively. Dividend income for the year was $14,000, which was paid by a firm in which Hulett owns 85 percent of the shares. Use the corporate tax rates shown in the popup window, EEB, to Comcute the corporation's tax liability. What are the firm's average and marginal tax ratesf? The firm's tax liability for the year is $63,590. (Round to the nearest dollar.) The fim's average tax rate is%. (Round to two decimal places)

Explanation / Answer

Hence

Tax liability = $63,590

Average tax rate = 30.86%

Sales $41,00,000 Cost of good sold (30,60,000) Gross profit $10,40,000 Cash operating expenses ($493,000) Depreciation expenses ($341,000) Operating profits $206,000 Dividend Income $14000( since Hulett own more than 80% of share of the firm from which it received dividend, none if the dividend are taxable to Hulett, and we can ignore these.) $0 Taxable income $206,000

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