Question

Compute the State of Illinois Corporate income taxes at 41 2% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax in not deductible on the Illinois return. Assume federal corporate income tax on income subject to federal tax is as follows:
First $50,000 @15% next 25,000 @25% remainder @34%
HINT: Corporations subject to federal income taxes must make estimated tax payments throughout the year. At the time of the payment, the account Income Tax Expense is debited and cash is credited. To determine the taxable income at year end, net the total debits and the total credits from the income statement. Note that the estimated income tax expense is listed as a debit and must be subtracted from total debits when determining taxable income since it is not a deductible item.

income tax expense is 72,000

Answer 1

Income Tax exp = 72000
Federal corporate Income tax=
		Tax
0-50000	15%	7500	(50000*15%)
50001 - 75000	25%	6250	(25000*25%)
75001 & above	34%	0.34x	(x*34%)
Total		72000
therefore	72000=	7500+6250+0.34x
Accordingly	x=	171323
So total income =	50000+25000+171323
	246323
Now Total Income after adjusting illinois corporate income tax	246323
illinois corporate income tax	41.20%
So Total Income before adjusting illinois corporate income tax	418916.7	(246323/(1-41.20%)
Here Illinois corporate income tax	172593.7	(418916.7*41.2%)