For 2017, Nevada Mining had projected taxable income of $94,800. Its actual taxable income exceeded this projection by $21,000. How much additional tax did the firm owe due to the $21,000 increase in taxable income? $\begin{array}{c}
\begin{array}{c}
\text { Taxable Income }\
\begin{array}{lll}
\$0&\text { - } &50,000 \
50,001 &\text { - } &75,000 \
75,001&\text { - } &100,000 \
100,001&\text { - } &335,000 \
\end{array}
\end{array}
\begin{array}{c}
\text { Tax Rate}\
15 \% \
25 \
34 \
39
\end{array}
\end{array}$

Question

Quizplus · Accepted Answer

The taxable income of $94,800 falls in the range of $75,001 to $100,000. The tax rate for this range is 34%. The additional tax owed is $21,000 x 0.34 = $7,140. However, the firm also owes additional tax on the original $94,800 of taxable income. The tax on this amount is $94,800 x 0.34 = $32,232. The total additional tax owed is $7,140 + $32,232 = $39,372.

For 2017, Nevada Mining Had Projected Taxable Income of $94,800