Problem 6-7 1.) Corporate Tax Liability

To complete the assignments listed below, refer to the Table 2-1.

The Talley Corporation had a taxable income of $375,000 from operations after all operating costs but before: (1) interest charges of $75,000, (2) dividends received of $18,750, (3) dividends paid of $18,750, and (4) income taxes.

What are the firm's income tax liability and its after-tax income? Round your answers to two decimal places.

Income tax liability	$
After-tax income	$

What are the company's marginal and average tax rates on taxable income? Round your answers to two decimal places.

Marginal tax rate	%
Average tax rate	%

2.) Corporate Tax Liability

To complete the assignments listed below, refer to the Table 2-1.

The Wendt Corporation had $10.5 million of taxable income.

What is the company's federal income tax bill for the year? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.

$ ___________________

Assume the firm receives an additional $1 million of interest income from some bonds it owns. What is the tax on this interest income? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. $ ________________

Now assume that Wendt does not receive the interest income but does receive an additional $2.5 million as dividends on some stock it owns. What is the tax on this dividend income? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. $_______________