Provisions of the U.S. Tax Code for Corporations and Individuals In general, is the U.S. federal tax system progressive or regressive? Regressive Progressive The applicable tax rate for S corporations is based on the: Stockholders' individual tax rates Corporate tax rate Cold Goose Metal Works owns 85,000 shares in the Fat Fox Smelting Corp.. If Fat Fox 5melters has 100,000 shares of common stock outstanding, can Cold Goose file a single income tax return that reports the incomes and expenses of both companies? Yes, because Cold Goose Metal Works's ownership stake in Fat Fox Smelters is greater than or equal to B0\%, as required by the U.S. Tax. Code. No, because Cold Goose Metal Works's ownership stake in Fat Fox Smelters is less than or equal to 49%, whereas 50% or more is required by the U.S. Tax code. Yes, because Cold Goose Metal Works's ownership stake in Fat Fox Smelters is greater than or equal to 60%, as required by the U.S. Tax Code: Assume that the tax rate on corporate taxable income up to $50,000 is 15%, and 25% for income levels between $50,001 and $75,000. If the Clumsy Chinuahua Music Company has a taxable income of $59,000, then it has a tax liability of and an averoge tax rate of Suppose you want to invest $10,000. You have two options: Option \# 1: Invest in municipal bonds with an expected return of 12.00%, or Option \#2: tnvest in the corporate bonds of Jefferson 8 . Alexander Inc. which are offering an expected return of 15.00% Assume that the tax rate on corporate taxable income up to $50,000 is 15%, and 25% for income levels between $50,001 and $75,000. If the Clumsy Chihuahua Music Company has a taxable income of $59,000, then it has a tax liability of and an average tax rate of Suppose you want to invest $10,000. You have two options: Option \#1: Invest in municipal bonds with an expected return of 12.00%, or Option #2 : Invest in the corporate bonds of Jefferson \&. Alexander Inc. which are offering an expected return of 15.00% Assume that your decision is based solely on your tax situation. If everything else is the same for both bonds, at what tax rate would you be indifferent between these two bond investments? 18.60% 25.60% 20.00% 22.00% For your personal portfolio, you purchased 1,000 shares of a foreign manufacturing company for $41.00 per share and sold it for $72.00 per share after three years. How will your gain or loss be treated when you file your taxes? As a capital gain that will be taxed at the current ordinary income tax rate As a capital gain that will be taxed at the capital gains tax rate