Sandersen Inc, sells minicomputers. During the past year, the company\'s sales w

Question

Sandersen Inc, sells minicomputers. During the past year, the company's sales were 3.00 million. The cost of its merchandise sold came to 2.00 million, and cash operating expenses were 400,000; depreciation expense was 100,000, and the firm paid 150,000 in interest on its bank loans. Also, the corporation paid 25,000 in the form of dividends to its own common stockholders.
Calculate the corporation tax liability.
The corporate tax rates are listed here:

Explanation / Answer

Taxable Income = Sale-Cost of merchandise sold - operating expenses - depreciation- interest expenses

Taxable Income = 3000000-2000000-400000-100000-150000

Taxable Income = $ 350,000

Corporate Tax Liability = 50000*15% + (75000-50000)*25% + (350000-75000)*34% + (335000-100000)*5%

Corporate Tax Liability = $ 119000

Answer

Corporate Tax Liability = $ 119000

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