Purchase Solution

Federal income tax bill;tax on interest & dividend income

Not what you're looking for?

Ask Custom Question

The Wendt Corporation had 10.5 million of taxable income.

a. What is the company's federal income tax bill for the year?
b. Assume the firm receives an additional $1 million of interest income from some bonds it owns. What is the tax on this interest income?
c. Now assume that Wendt does not receive the interest income but does receive an additional $1 million as dividends on some stock it owns. What is the tax on this dividend income?

Purchase this Solution
Solution Summary

This post shows how to calculate the company's federal income tax bill for the year, the tax on the interest and dividend income.

Solution Preview

Problem 3-8 Corporate Tax Liability
The Wendt Corporation had 10.5 million of taxable income.
a. What is the company's federal income tax bill for the year?
Tax = $3.4 million + 35% * (10.5 million -10 million) = 3.575 million

b. Assume the firm ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Motivation

This tests some key elements of major motivation theories.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

View More Free Quizzes
Related BrainMass Solutions

  • Finance: Calculate federal tax for Wendt Corporation

    Now assume that Wendt does not receive the interest income but does receive an additional $1 million as dividends on some stock it owns. What is the tax on this dividend income?

  • Tax calculation

    What is the tax on this interest income? c. Now assume that the company does not receive the interest income but does receive an additional $1 million as dividends on some stock it owns. What is the tax on this dividend income? a.

  • Various Financial Case Studies: Interest, Net Cash Flow, Tax Rates

    What is the firm's federal income tax bill for the year? b.Assume the firm receives an additional $1 million of interest income from some bonds it owns. What is the tax on this interest income? c.

  • Managerial Finance Problems

    What is the company's federal income tax bill of for the year? b. Assume the firm receives an additional $3 million of interest income from some bonds it owns. What is the tax on this interest income? c.

  • After Tax Yield and Tax Liability

    Dividends received - 70% of the dividend amount is excluded and tax is to be paid only on the 30% Interest is fully deducted from earnings before tax.

  • Advantage of common stock investment

    The regular federal tax payable on that amount is reduced by the amount of the dividend tax credit. The provincial tax, which is based on the amount of federal tax, is reduced accordingly.

  • What is the corporate tax liability for last year?

    Lets calculate Profit before taxes which is Operating Income+Interest received+Dividend received-Interest paid =2500000+100000+200000-450000 =2350000 Taxes will be calculated on PBT, hence 40%* 2350000 Corporate tax liability=$940000 Note:

  • David Corporation: Record estimated taxes dividend

    488547 Recording federal income tax transactions and cash dividend transactions.

  • Tax liability

    Dividends received - 70% of the dividend amount is excluded and tax is to be paid only on the 30% Interest is fully deducted from earnings before tax and interest received is fully taxable We have Operating Income 2,500,000 Less Interest paid 450,000

View More Related Solutions