Hunt Taxidermy. Inc. is concerned about the taxes paid by the company in 2018. I

Question

Hunt Taxidermy. Inc. is concerned about the taxes paid by the company in 2018. In addition to $4.3 million of taxable income, the firm received $304,000 of interest on state-issued bonds and $140,000 of dividends on common stock it owns in Oakdale Fashions, Ins. (Use Table 2.3) Calculate Hunt Taxidermy’s tax liability. (Enter your answer in dollars not in millions. Round your answer to the nearest dollar amount.) Table 2.3 Corporate Tax Rates as of 2015 Taxable Income Pay this Amount on Base Income Plus this Percentage on Anything Over the Base $0-$50,000 $0 15% $50,001-$75,000 7,500 25 $75,001-$100,000 13,750 34 $100,001-$335,000 22,250 39 $335,001-$10,000,000 113,900 34 $10,000,001-$15,000,000 3,400,000 35 $15,000,001-$18,333,333 5,150,000 38 Over $18,333,333 6,416,667 35

Explanation / Answer

Total taxable Income = 4,300,000 + 30% (140,000) = 4,342,000

Here, the Interest incoome on state - issued bonds = 304000 is exempted.

Dividend income is includable to the extent of 30% only.

A reference to the table provided ( tax rate schedule applicable to 2015 ) indicates that 4,342,000 shall fall in the range of $335,001-$10,000,000 where a fixed tax of 113900 + 34% of income above 335000.

Tax liability = 113,900 + 34% ( 4342,000 - 335,000 ) = 113,900 + 0.34 * 4007000

= 1,476,280 ............. final answer

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