Jenkin Corporation reported the following for its first two taxable years. Calculate Jenkin's U.S. tax liability for Year 2.

Question

Jenkin Corporation reported the following for its first two taxable years.  Calculate Jenkin's U.S. tax liability for Year 2.

Quizplus · Accepted Answer

Based on the information in the table, Jenkin Corporation has taxable income of $800,000 in Year 2. Using the tax rates provided in the table, the tax liability would be calculated as follows:

- First $50,000: 15% = $7,500
- Next $25,000: 25% = $6,250
- Next $25,000: 34% = $8,500
- Next $235,000: 39% = $91,650
- Remaining $465,000: 34% = $158,100

Total tax liability = $7,500 + $6,250 + $8,500 + $91,650 + $158,100 = $272,000

However, Jenkin Corporation is also entitled to a $44,000 foreign tax credit from Year 1, which reduces its U.S. tax liability for Year 2 to $228,000 (i.e. $272,000 - $44,000). Therefore, the correct answer is C.

Jenkin Corporation Reported the Following for Its First Two Taxable