Bentley Inc. received $31,000 in dividends over the past year. If 80% are excluded from taxation and assuming a flat tax rate of 35%, what is Bentley's tax liability?

Question

Bentley Inc. received $31,000 in dividends over the past year.  If 80% are excluded from taxation and assuming a flat tax rate of 35%, what is Bentley's tax liability?

Quizplus · Accepted Answer

First, we need to determine how much of the dividends are taxable. 80% of $31,000 is $24,800, which means $6,200 is taxable. Applying a flat tax rate of 35%, Bentley's tax liability would be $2,170.