Question

Ch 03: Blueprint Problems- Financial Statements, Cash Flow, and Taxes 2017 Individual Tax Rates Single Individuals Plus This Percentage You Pay This Average Tax Amount on the on the Excess over the Rate at Base (Marginal Rate) Base of the Bracket If Your Taxable Top of Bracket Income Is 10.0 % 10.0% Up to $9,325 $0 $9,325 $37,950 932.50 15.0 13.8 $37,950 $91,900 5,226.25 25.0 20.4 $91,900 $191,650 18,713.75 28.0 24.3 $191,650 $416,700 46,643.75 33.0 29.0 $416,700 $418,400 120,910.25 35.0 29.0 Over $418,400 121,505.25 39.6 39,6 Standard deduction for individual: $6,350 Married Couples Filing Joint Returns You Pay This Plus This Percentage Average Tax Amount on the on the Excess over the Rate at If Your Taxable Base of the Bracket Base (Marginal Rate) Tep of Bracket Income Is Up to $18,650 $0 10.0% 10.0% $18,650 $75,900 1,865.00 15.0 13.8 $75,900 $153,100 10,452.50 25.0 19.4 $153,100 $233,350 $233,350 $416,700 $416,700 $470,700 29,752.50 28.0 22.4 52,222.50 33.0 27.1 112,728.00 35.0 28.0 Over $470,700 131,628.00 39.6 39.6 ( 7) Ch 03: Blueprint Problems- Financial Statements, Cash Flow, and Taxes Amount on tne on tne Excess over tne KALE au If Your Taxable Base of the Bracket: Base (Marginal Rate) Top of Bracket Income Is Up to $18,650 10.0% 10.0% $18,650-$75,900 1,865.00 15.0 13.8 $75,900 $153,100 10,452.50 25.0 19.4 $153,100 $233,350 29,752.50 28.0 22.4 $233,350 $416,700 52,222.50 33.0 27.1 $416,700 $470,700 Over $470,700 112,728.00 35.0 28.0 131,628.00 39.6 39.6 Standard deduction for married couples filing jointly: $12,700 Quantitative Problem: Jenna is a single taxpayer with no dependents so she qualifies for one personal exemption. Durhg 2017, she earned wages of $122,000. She doesn't itemize deductions, so she will take the standard deduction and her personal exemption to calculate 2017 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $4,500. How much does Jenna owe to the IRS for taxes? Round your intermediated and final answers to the nearest cent. Corporate 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 income is taxed more favorably, 70 % of dividends received is excluded from taxable income, while the remaining 30 % is taxed at the ordinary tax rate. For businesses. payments are not tax deductible. Consequently, our tax system encourages the taxable income, the lower the taxes, and ther interest #payments are regarded as an expense so they are tax deductible; however, dividend debb financing over equity financing. Depreciation expense is tax deductible, so the larger the depreciation, the lower Nigher the firm's operating cash flow. The projected 2017 tax rate schedule for corporations is shown below. 2017 Corporate Tax Rates It Pays This Plus This Percentage Average Tax If a Corporation's Amount on the on the Excess over the Rate at Taxable Income Is Base of the Bracket Base (Marginal Rate) Top of Bracket W ,UEel received is excluded from taxable income, while the remaining 30% is taxed at the ordinary tax rate. For businesses. dividend income is taxed more favorably, 70% of dividends interest payments are regarded as an expense so they are tax deductible; however, dividend payments are not tax deductible. Consequently, our tax system encourages deti financing over equity financing. Depreciation expense is tax deductible, so the larger the depreciation, the lower higher the firm's operating cash flow. The projected 2017 tax rate schedule for corporations is shown below. the taxable income, the lower # the taxes, and the 2017 Corporate Tax Rates It Pays This Plus This Percentage Average Tax If a Corporation's Amount on the on the Excess over the Rate at Taxable Income Is Base of the Bracket Base (Marginal Rate) Top of Bracket Up to $50,000 15.0% 15.0% $50,000 $75,000 7,500 25.0 18.3 $75,000 $100,000 13,750 34.0 22.3 $100,000 $335,000 22,250 39.0 34.0 $335,000 $10,000,000 113,900 34.0 34.0 $10,000,000-$15,000,000 3,400,000 35.0 34.30 $15,000,000-$18,333,333 5,150,000 38.0 35.0 Over $18,333,333 6,416,667 35.0 35.0 Quantitative Problem: Andrews Corporation has income from operations of $248,000. In addition, it received interest income of $24,800 and received dividend income of $31,300 from another corporation. Finally, it paid $11,900 of interest income to its bondholders and paid $43,800 of dividends to its common stockholders. Using the 2017 corporate tax schedule, what is the firm's federal income tax? Round your intermediate and final answers to the nearest cent Grade t New Save &Continue Continue without saving W esc ES %

Answer 1

Data Available
Income from operations	248000
Interest income	24800
Dividend Income	31300
Interest paid	11900
Dividend to stock holders	43800

Corporations Federal Income tax 2017
Income from opeartions	248,000
Add :
Dividend taxable	9,390	Only 30% is taxable at ordinary tax rate;
Interest income	24,800	Assumed taxable - in the absence of information
	34,190
Less :
Interest payment	11,900	100% tax deductible
Dividend to stock holders	-	Not tax deductible
	11,900
Net taxable income	270,290
Tax slab applicable	39%	above 22250
Federal tax payable	96,736