Tax Liability and Marginal Tax Rate
Not what you're looking for?
I need assistance in solving the two problems below:
1. Assume that a corporation has $100,000 of taxable income from operations plus $5,000 of interest income and $10,000 of dividend income. What is the company's tax liability?
2. Assume that you are in the 25% percent marginal tax bracket and that you have $5,000 to invest. You have narrowed your investment choices down to California bonds with a yield of 7 percent or equally risky ExxonMobil bonds with a yield of 10 percent. Which one should you choose and why? At what marginal tax rate would you be indifferent to the choice between California and ExxonMobil bonds?
Purchase this Solution
Solution Summary
The solution explains how to calculate the tax liability and the marginal tax rate at which one would be indifferent between two investment opportunities
Solution Preview
1. Interest income is fully taxable and so would be added to the 100,000 of taxable income. Dividend income is tax exempt for 70% of the amount. For a dividend income of 10,000, 7,000 will not be taxable and 3,000 would be added to the taxable income. The taxable income is
Initial taxable income 100,000
Add: Interest income 5,000
Add: ...
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.