In tax year 1, an electronics-packaging firm had a gross income of $34,000,000,

Question

In tax year 1, an electronics-packaging firm had a gross income of $34,000,000, $8,000,000 in salaries, $7,000,000 in wages, $1,200,000 in depreciation expenses, a loan principal payment of $300,000, and a loan interest payment of $250,000. Determine the net income of the company in tax year 1 Click the icon to view the corporate tax schedule for 2015 The net income of the company in tax year 1 is S(Round to the nearest dollar.) More Info Tax Computation Formula Taxable Income (X) $0-S50,000 50,001-75,000 75,001-100,000 100,001-335,000 335,001-10,000,000 10,000,001-15,000,000 15.000.001-18,333,333 18,333,334 and up Tax Rate 15% 25% 34% 34% + 5% 34% 35% 35% + 3% 35% S0+0.15X 7,500+0.25(X-S50,000) 13,750 +0.34(X- 75,000) 22,2500.39(X- 100,000) 113,900 +0.34(X- 335,000) 3.400.000 +0.35(X-10.000.000) 5,150,000 +0.38(X-15.000,000) 641 6.666 +0.35(X-18.333.333) Print Done

Explanation / Answer

**Income before tax falls in range of 15,000,000 -18,333,333

Tax: 5,150,000+ .38[17,550,000-15,000,000]

       5,150,000+ 969,000

        6,119,000

**repayment of loan is a capital payment not revenue

Gross Income 34,000,000 less:expense salaries 8,000,000 Wages 7,000,000 Depreciation 1,200,000 Interest 250,000 Income before tax 17,550,000 less:tax -6,119,000 Net Income 11,431,000

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