Question

2013 Individual Tax Rates
Single Individuals
If a Corporation's Taxable Income Is	It Pays This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)	Average Tax Rate at Top of Bracket
Up to $8,925	$0	10.0%	10.0%
$8,925 - $36,250	892.50	15.0	13.8
$36,250 - $87,850	4,991.25	25.0	20.4
$87,850 - $183,250	17,891.25	28.0	24.3
$183,250 - $398,350	44,603.25	33.0	29.0
$398,350 - $400,000	115,586.25	35.0	29.0
Over $400,000	116,163.75	39.6	39.6

Standard deduction for individual: $6,100

Married Couples Filing Joint Returns
If a Corporation's Taxable Income Is	It Pays This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)	Average Tax Rate at Top of Bracket
Up to $17,850	$0	10.0%	10.0%
$17,850 - $72,500	1,785.00	15.0	13.8
$72,500 - $146,400	9,982.50	25.0	19.4
$146,400 - $223,050	28,457.50	28.0	22.4
$223,050 - $398,350	49,919.50	33.0	27.1
$398,350 - $450,000	107,768.50	35.0	28.0
Over $450,000	125,846.00	39.6	39.6

Standard deduction for married couples filing jointly: $12,200

Quantitative Problem: Jenna is a single taxpayer with no dependents so she qualifies for one personal exemption. During 2013, she earned wages of $108,000. She doesn't itemize deductions, so she will take the standard deduction and her personal exemption to calculate 2013 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $4,000. How much does Jenna owe to the IRS for taxes? Round your intermediated and final answers to the nearest cent.
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Quantitative Problem: Andrews Corporation has income from operations of $244,000. In addition, it received interest income of $24,400 and received dividend income of $32,600 from another corporation. Finally, it paid $12,100 of interest income to its bondholders and paid $44,500 of dividends to its common stockholders. Using the 2013 corporate tax schedule, what is the firm’s federal income tax? Round your intermediated and final answers to the nearest cent.
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Answer 1

1)

Earned income from work	$108,000
Long-term gain	$4,000
Gross Income	$112,000
Less:Personal Exemptions	-$3,900
Less:Standard Deduction	-$6,100
Taxable Income	$102,000
Tax Liability
Regular Tax on ($102,000- $4000 L/T Capital Gain)	$98,000
Regular Tax = 17891.25 + (98000 - 87850) x 28%	$20,733.25
15% tax on long term capital gain (15% x $4000)	$600
Jenna owe to the IRS for taxes	$21,333.25

2)

Income from operations	$244,000.00
Interest Income	$24,400.00
Taxable Dividend Income = $32600 x 30%	$9,780.00
Less: Interest Expenses	-$12,100.00
Taxable income	$266,080.00
Tax owe by corporation = 22250 + (266080 -100000) x 39%	$87,021.20
Dividends paid to stockholders are not tax deductible