Darden Corporation has taxable income of $420,000. If it distributes all of its after-tax income to its sole shareholder who is in the 35 percent marginal tax bracket, what is the total tax burden on this $420,000 of income?

Question

Quizplus · Accepted Answer

The Answer is $400,000 x .34 = $136,000 corporate tax. ($400,000 - $136,000) x .15 = $39,600 individual tax. Total tax = $136,000 + $39,600 = $175,600.

Darden Corporation Has Taxable Income of $420,000