M table2.3 jpg (Refer to Table 2.3) Corporation Growth has $83,000 in taxable in
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M table2.3 jpg (Refer to Table 2.3) Corporation Growth has $83,000 in taxable income, and Corporation Income has $8,300,000 in taxable income. (Enter your answer as directed, but do not round intermediate calculations.) Olectures.mhhe.com/connect/007 Required (a) What is the tax bill for each firm? TABLE 2.3 Taxable Income Tax Rate 0- 50,000 50,00175,000 75,001100,000 100,001335,000 335,001-10,000,000 10,000,001- 15,000,000 15,000,001 18,333,333 15% 25 34 39 34 35 38 35 Tax bill Corporate tax rates Corporation Growth Corporation Income 16470 (b) Suppose both firrms have identfied a new project that will increase taxable income by $10,000. How much in additional taxes will each firm pay? 18,333,334+ Corporation Growth Corporation Income Hints References eBook & Resources Hint #1Explanation / Answer
a) Tax Bill Corporation Growth $17,150.00 Corporation Income $2,822,000.00 b) Corporation Growth $3,400.00 Corporation Income $3,400.00 Each firm has a marginal tax rate of 34% on the next $10,000 of taxable income despite their different average tax rates so both firms will pay an additional $3,400 in taxes. Corporation Growth Taxable Income $83,000.00 Tax Liability 0 - $50,000 = 50000 x 15% 7500 $50,001 - $75,000 = $25000 x 25% 6250 $75001 - $100000 = ($85000 - 50000-$25000) x 34% 3400 Total $17,150.00 Corporation Income Taxable Income $8,300,000.00 Tax Liability 0 - $50,000 = 50000 x 15% $7,500.00 $50,001 - $75,000 = $25000 x 25% $6,250.00 $75001 - $100000 = 25000 x 34% $8,500.00 $100001-$335,000 = $235000 x 39% $91,650.00 $8,300,000 - 50000-25000-25000-235000 = $7965000 x 34% $2,708,100.00 Tax bill $2,822,000.00
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