Lucy expects taxable revenues of $68,000 in the current year.Her adjustments to revenues are projected to be $3,000 this year.Her deductions and exemptions are projected at $23,000.There is no state income tax where Lucy resides.What is her federal tax under an assumed 20% average tax bracket?

Question

Quizplus · Accepted Answer

Taxable income = revenues - adjustments - deductions - exemptions
Taxable income = $68,000 - $3,000 - $23,000 = $42,000
Assuming a 20% tax bracket, the federal tax would be:
Federal tax = 20% x $42,000 = $8,400
Therefore, the best choice is B.

Lucy Expects Taxable Revenues of $68,000 in the Current Year