Question

2018 Individual Tax Rates
Single Individuals
If Your Taxable Income Is	You Pay 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 $9,525	$0	10.0	%	10.0	%
$9,525 - $38,700	952.50	12.0		11.5
$38,700 - $82,500	4,453.50	22.0		17.1
$82,500 - $157,500	14,089.50	24.0		20.4
$157,500 - $200,000	32,089.50	32.0		22.8
$200,000 - $500,000	45,689.50	35.0		30.1
Over $500,000	150,689.50	37.0		37.0

Standard deduction for individual: $12,000

Married Couples Filing Joint Returns
If Your Taxable Income Is	You Pay 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 $19,050	$0	10.0	%	10.0	%
$19,050 - $77,400	1,905.00	12.0		11.5
$77,400 - $165,000	8,907.00	22.0		17.1
$165,000 - $315,000	28,179.00	24.0		20.4
$315,000 - $400,000	64,179.00	32.0		22.8
$400,000 - $600,000	91,379.00	35.0		26.9
Over $600,000	161,379.00	37.0		37.0

Standard deduction for married couples filing jointly: $24,000

Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $105,000. 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 $5,200. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent.

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Quantitative Problem: Andrews Corporation has income from operations of $229,000. In addition, it received interest income of $22,900 and received dividend income of $32,000 from another corporation. Finally, it paid $11,000 of interest income to its bondholders and paid $45,700 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.

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Answer 1

Sol :

Calaculation of Jenne(Single Tax Payer) own to IRS for taxes.

Income from Wages = $105000

Less : Standard Deduction = $12000

Taxable Income = $93000

Tax Payable = +14089.50+(93000-82500)*24% = $16609.50

Note : Gain from sale of common stock is taxable is special rate.Since it is sold holding after holding for years it is a long term capital gain taxable at @15% of $5200 = $780

Calculation of Andrews Corporation own to IRS for taxes

Income from Operations = $229000

Add : Interest Income = $22900

Less : Interest Expense = $11000

Taxable Income = $240900

Firms federal tax rate @21% of $240900 = $50589

Note : Dividend expense are not a business expense so cannot be deducted for tax purposes.

Dividend income is taxable at a special rate other than the ordinary tax rate.