Sunny Vale Co.reported the following for the current tax year: Corporate tax rate schedule. Compute Sunny Vale's total income tax liability.

Question

Sunny Vale Co.reported the following for the current tax year: Corporate tax rate schedule.  Compute Sunny Vale's total income tax liability.

Quizplus · Accepted Answer

Using the tax rate schedule provided, we can calculate Sunny Vale's income tax liability as follows: 
- $50,000 x 15% = $7,500 
- ($75,000 - $50,000) x 25% = $6,250 
- ($100,000 - $75,000) x 34% = $8,500 
- ($335,000 - $100,000) x 39% = $98,850 
Total income tax liability = $7,500 + $6,250 + $8,500 + $98,850 = $121,100
However, we are also given a tax credit of $96,900, which reduces our income tax liability to $24,200. Therefore, the best choice is C.