Question

Compute the income tax liability for each of the following unrelated calendar year C corporations. Click here to access the tax table to use for part (a) and (b) of this problem. a. In 2017, Darter Corporation has taxable income of $74,500. $ b. In 2017, Owl Corporation has taxable income of $13,444,000. $ c. In 2018, Toucan Corporation has taxable income of $325,000

Answer 1

For year 2017, tax table was applicable and for year 2018 flat 21% rate was applicable, hence the tax calculation for different income of C Corporation has been calculated as below:

a. Income Tax Liability = $13,625

Calculation:

Total Income	74,500
Income Tax Liability for 2017:
				Tax liability
Over	But not over	Tax	of Amount over	Formula	Amount
-	50,000	15%	-	(50000 X 15%)	7,500
50,000	75,000	25%	50,000	(74500-50000) X 25%	6,125
		Total Tax Liability			13,625

b.  Income Tax Liability = $4,605,400

Calculation:

Total Income	13,444,000
Income Tax Liability for 2017:
				Tax liablity
Over	But not over	Tax	of Amount over	Formula	Amount
-	50,000	15%	-	(50000 X 15%)	7,500
50,000	75,000	25%	50,000	(75000-50000) X 25%	6,250
75,000	100,000	34%	75,000	(100000-75000) X 34%	8,500
100,000	335,000	39%	100,000	(335000-100000) X 39%	91,650
335,000	10,000,000	34%	335,000	(10000000-335000) X 34%	3,286,100
10,000,000	15,000,000	35%	10,000,000	(13444000-10000000) X 35%	1,205,400
		Total Tax Liability			4,605,400

c.  Income Tax Liability = $68,250

Calculation:

Total Income	325,000
Income Tax Liability for 2018:
Over	But not over	Tax	of Amount over	Tax liability
				Formula	Amount
-	Any Income	21%	-	(32500 X 21%)	68,250
		Total Tax Liability			68,250