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Sales for J. P. Hulett Inc. during the past year amounted to $ 3.8 million. Gross...

Sales for J. P. Hulett Inc. during the past year amounted to $ 3.8 million. Gross profits totaled $ 1.07 ​million, and operating and depreciation expenses were $ 502 comma 000 and $ 348 comma 000​, respectively. Dividend income for the year was $ 11 comma 000​, which was paid by a firm in which Hulett owns 85 percent of the shares. Use the corporate tax rates shown in the popup​ window, LOADING...​, to Comcute the​ corporation's tax liability. What are the​ firm's average and marginal tax​ rates? Taxable Income Marginal Tax Rate $0-$50,000 15% $50,001-$75,000 25% $75,001-$100,000 34% $100,001-$335,000 39% $335,001-$10,000,000 34% $10,000,001-$15,000,000 35% $15,000,001-$18,333,333 38% Over $18,333,333 35%

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Answer #1

Answer:

Taxable Income = $220,000

Calculations are as below:

Tax liability = 50000 * 15% + (75000 - 50000)* 25% + (100000 - 75000) * 34% + (220000- 100000) * 39%

= $69,050

Firm's average tax rates = Tax Liability / Taxable income = 69050 / 220000 = 31.39%

Marginal tax​ rate = 39%

Hence:

Tax liability = $69,050

Firm's average tax rates = 31.39%

Marginal tax​ rate =39%

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