Question

Refer to Table 2.3.) Corporation Growth has $86,000 in taxable income, and Corporation Income has $8,600,000 in taxable income.

a. What is the tax bill for each firm?

Answer 1

Tax bill for corporation growth = $17490

Tax bill for corporation income = $2924000

Explanation;

Tax bill for corporation growth is calculated as follow;

$50000 * 0.15	$7500
$25000 * 0.25	$6250
$11000 * 0.34	$3740
Total tax bill	$17490

Tax bill for corporation income is calculated as follow;

$50000 * 0.15	$7500
$25000 * 0.25	$6250
$25000 * 0.34	$8500
$235000 * 0.39	$91650
$8265000 * 0.34	$2810100
Total tax bill	$2924000