Question

(Corporate income tax​) Boisjoly Productions had taxable income of ​$ 19.5million.

a. Calculate​ Boisjoly's federal income taxes by using the corporate tax rate structure in the popup​ window, LOADING....

b. Now calculate​ Boisjoly's average and marginal tax rates.

c. What would​ Boisjoly's federal income taxes be if its taxable income was ​$ ​million?

d. Now calculate​ Boisjoly's average and marginal tax rates with taxable income of ​$ million.

a. Calculate​ Boisjoly's federal income taxes.

The total tax due is ​$

Corporate Tax Rates
​ 15%	​$0—​$50,000
​ 25%	​$50,001—​$75,000
​ 34%	​$75,001—​$10,000,000
​ 35%	over​ $10,000,000
Additional​ surtax:
• ​5% on income between​ $100,000 and​ $335,000
• ​3% on income between​ $15,000,000 and​ $18,333,333
​(Click on the icon located on the​ top-right corner of the data table above in order to copy its contents into a spreadsheet.​)

Answer 1

a). Tax Liability = Taxable Income * Tax Rate

= [$50,000 * 0.15] + [($75,000 - $50,000) * 0.25] + [($10,000,000 - $75,000) * 0.34] + [($19,500,000 - $10,000,000) * 0.35] + [($335,000 - $100,000) * 0.05] + [($18,333,333 - $15,000,000) * 0.03]

= $7,500 + $6,250 + $3,068,500 + $3,325,000 + $11,750 + $100,000 = $6,519,000

b). Average Tax Rate = Tax LIability / Taxable Income

= $6,519,000 / $19,500,000 = 0.3343, or 33.43%

Marginal Tax Rate = 35%

As the tax rate charged on the next earned dollar is 35%