For a corporation in the 25 percent marginal tax bracket that incurs $70.00 in labour and materials expense, plus $15.00 in depreciation expense while generating an incremental revenue of $100, tax liability will increase by:

Question

Quizplus · Accepted Answer

The taxable income is $15 ($100 revenue - $70 labor/materials - $15 depreciation). At a 25% tax rate, the tax liability increases by $3.75 (25% of $15).

For a Corporation in the 25 Percent Marginal Tax Bracket