A company wants to set up operations in a country with the following corporate t
ID: 2743261 • Letter: A
Question
A company wants to set up operations in a country with the following corporate tax rate structure:
Therefore, a taxable income of $60,000 would result in taxes due of
$50,000*0.15 + ($60,000-$50,000)*0.25 = $50,000*0.15 + $10,000*0.25
= $10,000
If the compay expects
gross revenues of $1,000,000,
$450,000 in total costs,
$30,000 in allowable tax deductions and
$10,000 in a one-time business start-up credit,
how much should the company expect to pay in taxes?
Please Show All Work!!
Taxable Income Tax Rate <$50,000 15% $50,000 - $75,000 25% $75,000 - $100,000 34% >$100,000 39%Explanation / Answer
One time business start up credit has to be returned post the taxes paid.
So, taxable income= 1,000,000-450,000-30,000= 520,000.
Tax=0.15*50,000+0.25*25000+0.34*25000+0.39*420000
=7500+6250+8500+163800
=$186050
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