Question 11: Practice Last year, Martyn Company had $150,000 in taxable income f

Question

Question 11: Practice Last year, Martyn Company had $150,000 in taxable income from its operations, $50,000 in interest income, and $100,000 in dividend income. Using the corporate tax rate table given below, what was the company's tax liability for the year? Answer: $72,950 SO-S50,000 $50,000-$75,000 $75,000-$100.00 S100,000-s335,000 335,000-$10,000,000 $10,000,000-$15,000,000 $15,000,000-$18,333 333 Over $18 333 333 SO 7.500 13.750 22.250 113,900 3.400,000 5,150,000 6,416,667 15% 25 34 39 34 35 38 35 Please show work without excel! Thank you :)

Explanation / Answer

Only 30% of dividend income is taxable

total taxable income = 150000 + 50000 + 30%*100000 = 230000

230000 in the range of 100000 to 335000 with marginal rate of 39%

230000 - 100000 = 130000, will be taxed at 39%

Total tax = tax on base + tax in range

= 22250 + 130000*39%

= 72950

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