Suppose that in addition to the $300,000 of taxable income from operations, Liam's Burgers, Inc. received $25,000 of interest on state-issued bonds and $50,000 of dividends on common stock it owns in Sodas, Inc. Using the tax schedule in
A)$106,100, 33.68%, 39%, respectively
B)$122,850, 39.00%, 39%, respectively
C)$129,500, 34.53%, 39%, respectively
D)$139,250, 37.13%, 39%, respectively

Question

Quizplus · Accepted Answer

The correct answer is A because the taxable income is $300,000 + $25,000 + $50,000 = $375,000. The tax on the first $100,000 is $21,250, the tax on the next $25,000 is $8,250, and the tax on the remaining $250,000 is $76,600. The total tax is $106,100. The effective tax rate is 106,100 / 375,000 = 33.68%. The marginal tax rate is 39%.

Suppose That in Addition to the $300,000 of Taxable Income