Purchase Solution

Taxable income and tax liability

Not what you're looking for?

Ask Custom Question

The Fair Corporation had sales of $ 5 million this past year. The cost of goods sold was $ 4.3 million, and operating costs were $ 100,000. Dividend income totaled $ 5,000. The firm sold land for $ 150,000 that had cost $ 100,000 5 months ago. The firm received
$ 150 per share from the sale of 1000 shares of stock. The stock was purchased for
$ 100 per share 3 years ago. Determine the corporation's taxable income and its tax liability.

Taxable income is basically determined as income less allowable exclusions and tax-deductible expenses
Seventy percent of any dividends received from another corporation are tax exempt
Dividends paid by the corporation to its stockholders are not tax deductible

Corporate rate structure:
15% $0 - $50,000
25% $50,001 - $75,000
34% $75,001 - 100,000
There is an added tax of 5% for income between $100,000 and $335,000.
There is also an additional added tax of 3% on income between $15 million and $18 1/3 million.

Purchase this Solution

Solution Summary

The solution explains how to calculate the taxable income and tax liability

Solution Preview

The taxable income is 701,500 and the tax liability comes to $238,510

Fair Corporation?Corporate Income Tax
Sales $5,000,000
Cost of Goods Sold (4,300,000)
Gross ...

Purchase this Solution


Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basics of corporate finance

These questions will test you on your knowledge of finance.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Motivation

This tests some key elements of major motivation theories.

Introduction to Finance

This quiz test introductory finance topics.