Torquay Inc.'s 2015 taxable income was $9,782,200, and its tax liability was $3,325,948. Torquay's director of tax estimates that the corporation's 2016 taxable income will be $13,350,000. Use the corporate tax rate schedule to compute Torquay's 2016 estimated tax payment due on April 15, 2016.

Question

Quizplus · Accepted Answer

First, we need to determine which tax bracket Torquay falls into based on its estimated taxable income of $13,350,000. 
Taxable income falls within the following tax brackets:
- Over $9,325,000 to $15,000,000: 34% 
- Over $15,000,000 to $18,333,333: 35% 
Since Torquay's estimated taxable income is within the first bracket, the tax rate is 34%. 
Next, we can calculate Torquay's estimated tax liability using the following formula: 
Tax liability = Taxable income x Tax rate 
Tax liability = $13,350,000 x 0.34 
Tax liability = $4,539,000 
Finally, we can use the following formula to determine the estimated tax payment due on April 15, 2016: 
Estimated tax payment = (Current year's tax liability / 4) 
Estimated tax payment = ($4,539,000 / 4) 
Estimated tax payment = $1,134,750 
Therefore, the correct answer is D.