Question

Windham Inc. is preparing tax filings for 2019. Assume the following tax table is applicable:

	Tax on Base	Percentage on
Taxable Income	of Bracket	Excess above Base
Up to $50,000	$ 0	15%
$50,000−$75,000	7,500	25
$75,000−$100,000	13,750	34
$100,000−$335,000	22,250	39
$335,000−$10,000,000	123,900	34
$10,000,000−$15,000,000	3,400,000	35
$15,000,000−$18,333,333	5,150,000	38
Over $18,333,333	6,416,667	35

The income statement shows that the taxable income is $290,500 in 2019.

a. What is Windham Inc. tax liability? (10 points) (Do not round intermediate calculations. Round your answer to the nearest dollar and DO NOT USE COMMA in your answer. E.g., $16666.6 should be rounded to $16667.)

Tax liability = $ (Note: Do not use comma in your answer)

b. What is the firm’s average tax rate? (10 points) (Do not round intermediate calculations. Round your answer to TWO decimal places. E.g., 0.6666% should be rounded to 0.67%.)

Average tax rate = %

Answer 1