Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 2-32 Inky Inc. reported the following financial information in 2015. Operating income (EBIT) Interest Dividends from Printers Inc. not included in operating income (Inky

image text in transcribed
image text in transcribed
Problem 2-32 Inky Inc. reported the following financial information in 2015. Operating income (EBIT) Interest Dividends from Printers Inc. not included in operating income (Inky owns 2% of Printers) Dividends paid to Inky's stockholders $650,000 $330,000 $ 40,000 $ 50,000 Corporate Income Tax Schedule Income ($) Rate (%) 0 - 50,000 15 50,000 - 75,000 25 75,000 - 100,000 34 100,000 - 335,000 39 335,000 - 10,000,000 34 10,000,000 - 15,000,000 35 15,000,000 - 18,333,333 38 Over 18,333,333 35 See the table below for the percentage exepmtions of dividends paid by corporations. Ownership Exemption 80 100% a. What is Inky's tax liability? Round the answer to the nearest dollar Check My Work 25 34 50,000 - 75.000 75,000 - 100,000 100,000 - 335,000 335,000 - 10,000,000 10,000,000 - 15,000,000 15,000,000. 18,333,333 Over 18,333,333 39 34 35 38 35 I See the table below for the percentage exeptions of dividends paid by corporations Ownership Exemption 0 100% a. What is inky's tax liability? Round the answer to the nearest dollar B. What is Inky's marginal tax rate? c. What is inky's average tax rate? Round the answer to 1 decimal place d. Bxplain why only one of the rates in bande is relevant for Financial decisione. Select the correct answer below 1. The marginal tax rate is relevant in financial decisions involving incremental income because such income is generally taxed at that rate 11. The average tax rate is relevant in financial sections involving incremental income because it calculation includes dividends to stockholders TIL. The marginal tax rate is relevant in financial decision involving incremental income because it helps to avoid double tation of earnings IV. The average tax rate is relevant in financial decisions involving incremental income because it is based on a more efficient progressive system as opposed to the marginal tax rate

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Asset Management And Institutional Investors

Authors: Ignazio Basile, Pierpaolo Ferrari

1st Edition

331932795X,3319327968

More Books

Students also viewed these Finance questions