Corporation Growth has $85,000 in taxable income, and Corporation Income has $8,
ID: 2659455 • Letter: C
Question
Corporation Growth has $85,000 in taxable income, and Corporation Income has $8,500,000 in taxable income. Use the tax rates from Table 2.3.
Suppose both firms have identified a new project that will increase taxable income by $14,000. How much in additional taxes will each firm pay?
Corporation Growth has $85,000 in taxable income, and Corporation Income has $8,500,000 in taxable income. Use the tax rates from Table 2.3.
Corporation Growth has $85,000 in taxable income, and Corporation Income has $8,500,000 in taxable income. Use the tax rates from Table 2.3. What is the tax bill for each firm? Suppose both firms have identified a new project that will increase taxable income by $14,000. How much in additional taxes will each firm pay?Explanation / Answer
Tax for corporation growth is 50000 * 0.15 + 25000 * 0.25 + 10000 * 0.34 = 17,150
Tax for corporation income is 50000 * 0.15 + 25000 * 0.25 + 25000 * 0.34 + 235000 * 0.39 + 8165000 * 0.34 = 2,890,000
Additional tax on 14000 is same as both fall in 34% tax bracket and hence the additional tax
corporation growth = 14000 * 0.34 = 4,760
corporation income = 14000 * 0.34 = 4,760