QUESTION 4

Problem 2-8 Corporate Tax Liability To complete the assignments listed below, refer to the Table 2-1. The Wendt Corporation had $11 million of taxable income. a. 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. $l:l b. Assume the rm receives an additional $1.25 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. $ 0 c. 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. $ 8 TABLE 2-1 Corporate Tax Rates as of January 2012 If a Corporation's Taxable It Pays This Amount on Plus This Percentage on Average Tax Rate at Income Is the Base of the Bracket the Excess Over the Base Top of Bracket Up to $50,000 15% 15.0% $50,000-$75,000 $7,500 25 18.3 $75,000-$100,000 $13,750 34 22.3 $100,000-$335,000 $22,250 39 34.0 $335,000-$10,000,000 $1 13,900 34 34.0 $10,000,000-$15,000,000 $3,400,000 35 34.3 $15,000,000-$18,333,333 $5,150,000 38 35.0 Over $18,333,333 $6,416,667 35 35.0