In 2019, Troy Enterprises had revenues of $250,000 for book purposes and $220,000 for tax purposes. Troy also had expenses of $125,000 for both book and tax purposes. If Troy has a 20% tax rate, what are Troy's income taxes payable for 2019?

Question

Business

Miah Bautista

19 May, 20:42

In 2019, Troy Enterprises had revenues of $250,000 for book purposes and $220,000 for tax purposes. Troy also had expenses of $125,000 for both book and tax purposes. If Troy has a 20% tax rate, what are Troy's income taxes payable for 2019?

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Answers (1)

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Frida Baird · Answer 1

The Income tax payable is $19,000

Explanation:

The reason is that in the tax books the tax is calculated on the taxable from which can be calculated by following formula:

Taxable profits = Taxable Revenues - Taxable Costs

Here the taxable revenue is $220,000 and taxable costs are $125,000.

By putting the values, we have:

Taxable profits = $220,000 - $125,000 = $95,000

The tax payable is calculated by extracting a tax percentage of taxable profits

Tax Payable at the rate 20% = $95,000 * 20% = $19,000