Computing Income Taxes

The William B. Waugh Corporation is a regional Toyota dealer. The firm sells new and used trucks and is actively involved in the parts business. During the most recent year, the company generated sales of 3.13 million. The combined cost of goods sold and the operating expenses were $2.08 million. Also, 377,000

in interest expense was paid during the year. Calculate the corporation's tax liability by using the corporate tax rate structure in the popup window,

Corporate Tax Rates

15%

$0long dash- $50,000

25%

$50,001long dash- $75,000

34%

$75,001long dash- $10,000,000

35%

over $10,000,000

Additional surtax:

5% on income between $100,000 and $335,000

3% on income between $15,000,000 and $18,333,333

.

The corporation's tax liability is ... ?

Question

Business

Tinky

7 November, 09:20

Computing Income Taxes

The William B. Waugh Corporation is a regional Toyota dealer. The firm sells new and used trucks and is actively involved in the parts business. During the most recent year, the company generated sales of 3.13 million. The combined cost of goods sold and the operating expenses were $2.08 million. Also, 377,000

in interest expense was paid during the year. Calculate the corporation's tax liability by using the corporate tax rate structure in the popup window,

Corporate Tax Rates

15%

$0long dash- $50,000

25%

$50,001long dash- $75,000

34%

$75,001long dash- $10,000,000

35%

over $10,000,000

Additional surtax:

5% on income between $100,000 and $335,000

3% on income between $15,000,000 and $18,333,333

.

The corporation's tax liability is ... ?

+2

Answers (1)

Know the Answer?

Alden · Answer 1

The corporation's tax liability is $ 228,820.

Explanation:

To calculate tax liability we first have to find net profit. Detail calculation is given below.

Net profit Calculation

Sales $ 3,130,000

cost of goods sold and the operating expenses ($ 2,080,000)

Interest expense ($ 377,000)

Net profit $ 673,000

Tax liability Calculation

Income fall under Tax bracket of 34% ($75,001 to $10,000,0000 for corporate tax. No additional surtax will be charged as income do not fall under its net.

Tax liabilty = 673,000 * 34% = $ 228,820