Tantor Supply, Inc., is a small coporation acting as the exclusive distributor o

Question

Tantor Supply, Inc., is a small coporation acting as the exclusive distributor of a major line of sporting goods. During 2013 the firmed earned $92,500 before taxes. Calculate the firm's tax liability using the corporate tax rate schuedule,

Corporate Tax Rate Schedule Tax calculation Range of taxable income Base tax (Marginal rate x amount over base bracket) $0 to 50,000 to 75,000 to 100,000 to 335,000 to 10,000,000 to 15,000,000 to Over 18,333,333 $50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333 $0 (15% x amount over 7,500 + (25% x amount over 13,750 + (3490 x amount over 22,250 + (39% x amount over 113,900 + (34% x amount over 3,400,000 + (35% amount over 5,150,000 (38% amount over 6,416,667 + (35% × amount over $0) 50,000) 75,000) 100,000) 335,000) 10,000,000) 15,000,000) 18,333,333)

Explanation / Answer

Answer:

Calculation of the firm's tax liability using the corporate tax rate schedule:

Total Income is given   =$92500

For the part of income upto $50000, Tax = 15% * 50000 = $7500

For the Income above $50000 but upto $75000, Tax = 25% * 25000 = $6250

For the Income above $75000 but upto $100000, Tax = 34% * (92500-75000) = $5950

Total Tax liability = $7500+$6250+$5950 = $19700

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