Government Q imposes a net income tax on businesses operating within its jurisdiction. The tax equals 3% of income up to $500,000 and 5% of income in excess of $500,000. Company K generated $782,000 net income this year. Compute the income tax that Company K owes to Q.

Question

Quizplus · Accepted Answer

The tax on the first $500,000 of income is 3% x $500,000 = $15,000. The tax on the remaining $282,000 of income is 5% x $282,000 = $14,100. The total tax is $15,000 + $14,100 = $29,100.

Government Q Imposes a Net Income Tax on Businesses Operating