Question

Quantitative Problem: Jenna is a single taxpayer. During 2018 , she earned wages of $ 124,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $ 4,100. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent.

Corporations earn most of their income from operations; however, they may also receive interest and dividend income. [Interest ∇ income is taxed as ordinary income; however, dividend V income is taxed more favorably. 50 % of dividends V received is excluded from taxable income, while the remaining 50 % is taxed at the ordinary tax rate. For businesses, linterest P payments are regarded as an expense so they are tax deductible; however, dividend V payments are not tax deductible. Consequently, our tax system encourages

Quantitative Problem: Andrews Corporation has income from operations of $ 251,000. In addition, it received interest income of $ 25,100 and received dividend income of $ 30,300 from another corporation. Finally, it paid $ 11,300 of interest income to its bondholders and paid $ 45,800 of dividends to its common stockholders. The firm's federal tax rate is 21 %. What is the firm's federal income tax? Do not round intermediate calculations. Round your answer to the nearest dollar.

Answer 1

Part 1

Wages	124000
Long-term gain	4100
Gross income	128100
Above the line deductions	0
AGI	128100
Standard deduction	12000
Taxable income	116100
Tax liability on ordinary income 112000 (116100-4100)	22154 (14089.50+(24%*(116100-82500))
Tax liability on long term capital gain	615 (4100*15%)
Total tax owe	$22769

Part 2

Income operations	251000
Interest income	25100
Taxable dividend income (30300*(1-50%))	15150
Interest expense	(11300)
Taxable income	279950
Tax rate	21%
Federal income tax	$58790