(Computing income taxes) The William B. Waugh Corporation is a regional Toyota d

Question

(Computing income taxes) The William B. Waugh Corporation is a regional Toyota dealer. The firm sells new and used trucks and is actively involved in the parts business. During the most recent year, the company generated sales of $3.08 million. The combined cost of goods sold and the operating expenses were $2.05 million. Also, $398,000 in interest expense was paid during the year. Calculate the corporation's tax liability by using the corporate tax rate structure in the popup window, The corporation's tax liability is $ (Round to the nearest dollar.)

Explanation / Answer

Taxable Income =sales -cost of goods sold including all expense -Interest

            = 3080000- 2050000- 398000

               = 632000

Tax liability will be as follows :

First 50000 will be taxed at 15% [50000*.15] 7500 next 25000 will be taxed at 25% [25000*25%] 6250 Remaining income of 557000 (632000-50000-25000) will be taxed at 34%   [557000*.34] 189380 Additional surchage    [335000-100000]*.05 11750 Total tax liability 214880

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