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Taxable Income & Tax Liability

D&D, Inc. reported the following results for 2007. Calculate D&D's taxable income and resulting tax liability using the tax rates given.

Sales $20,000,000
Cost of sales $8,000,000
Operating expenses $1,000,000
Depreciation expense $500,000
Interest expense $1,500,000
Common stock dividends paid $500,000
Dividends received from Corporation Z
(D&D owns 10% of Corporation Z) $100,000
______________________________________________________________

Corporate Tax Rates Taxable Income

15% $0 - $50,000
25% $50,001 - $75,000
34% $75,001 - $10,000,000
35% over $10,000,000

Additional surtax of 5% on income between $100,000 and $335,000
Additional surtax of 3% on income between $15,000,000 and $18,333,333

Solution Summary

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

$2.19