Sales for J. P. Hulett Inc. during the past year amounted to $4 million. Gross profits totaled

Question:

Sales for J. P. Hulett Inc. during the past year amounted to $4 million. Gross profits totaled $1 million, and operating and depreciation expenses were $500,000 and $350,000, respectively. Dividend income for the year was $12,000, which was paid by a firm in which Hulett owns 85 percent of the shares. Compute the corporation’s tax liability. What are the firm’s average and marginal tax rates?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...