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Sales for J. P. Hulett Inc. during the past year amounted to $3.9 million. Gross profits totaled $1.07 million, and operating and depreciation expenses were

Sales for J. P. Hulett Inc. during the past year amounted to $3.9

million. Gross profits totaled $1.07

million, and operating and depreciation expenses were $494,000

and $360,000,

respectively. Dividend income for the year was $10,000,

which was paid by a firm in which Hulett owns 85

percent of the shares.

Use the corporate tax ratesto Comcute thecorporation's tax liability. What are thefirm's average and marginal taxrates?

Taxable Income Marginal Tax Rate
$0minus$50,000 15%
$50,001minus$75,000 25%
$75,001minus$100,000 34%
$100,001minus$335,000 39%
$335,001minus$10,000,000 34%
$10,000,001minus$15,000,000 35%
$15,000,001minus$18,333,333 38%
Over$18,333,333

35%

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