Homework 4 Last year, Champaign Company had $140,000 in taxable income from its

Question

Homework 4 Last year, Champaign Company had $140,000 in taxable income from its operations, $50,000 in interest income, and $100,000 in dividend income. Using the corporate tax rate table given below what was the company's tax liability for the year? axable Income SO-$50,000 $50,000-$75,000 $75,000-$100,000 $100,000-$335,000 $335,000-$10,000,000 $10,000,000-$15,000,000 $15,000,000-$18,333,333 Over $18,333.333 Tax on Base of Bracket Percentage on Excess above Base S0 7,500 13,750 22,250 113,900 3,400,000 5,150,000 6,416,667 1 5% 25 34 39 34 35 38 35

Explanation / Answer

1) Calculation of tax liability of Champaign company :

Since the Taxable income of the company already included the Interest income and Dividend income.Now we dont need to add them again to the taxable income given.

Tax Liability :

= $22,250 + ($140,000 - $100,000) * 39%

= $22,250 + $15,600

= $37,850

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