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    Effective tax rate on taxable income for Kammerling

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    The Kammerling Corporation has $250,000 of taxable income. It distributes $100,000 of that income as a dividend to its sole shareholder whose other income puts him in the 35 percent marginal tax bracket.

    Calculate the effective tax rate on the corporation's $250,000 of taxable income?

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    Solution Preview

    The effective tax rate is a simple calculation of tax / taxable income. The other tax rate more often mentioned is the marginal rate which speaks to the tax rate for the next dollar of income using the corporate charts.

    Note that the dividend is not a ...

    Solution Summary

    The solution demonstrates the difference between effective and marginal rates of taxaction for a "C" corporation. The detailed calculations are shown. The effect of the dividends are also explained.