Corporation A has $80837 in taxable income, and Corporation B has $1.3 million i
ID: 2813579 • Letter: C
Question
Corporation A has $80837 in taxable income, and Corporation B has $1.3 million in taxable income. What is the difference between the tax bills of these two firms?
use the following table:
Taxable Income 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%
18,333,334 + 35%
Explanation / Answer
upto 75,000 the tax bill would be the same
tax after 75,000 for A = 0.34*(80,837 - 75,000) = 1,984.58
tax for B = 0.34*25,000 + 0.39*225,000 + 0.34*(1,300,000 - 335,000) = 424,350.00
difference = 424,350.00 - 1,984.58 = 422,365.42