The tax liability of a corporation with ordinary income of $1,100,000 is ________.

Question

Quizplus · Accepted Answer

The tax liability for a corporation with ordinary income of $1,100,000 is calculated as follows:
- The first $50,000 is taxed at a rate of 15%, which equals $7,500.
- The next $25,000 is taxed at a rate of 25%, which equals $6,250.
- The next $25,000 is taxed at a rate of 34%, which equals $8,500.
- The remaining $1,000,000 is taxed at a rate of 35%, which equals $350,000.
- Add these amounts together to get the total tax liability, which is $372,250. However, since there is a surtax of 3.8% on net investment income for corporations with over $100,000 in taxable income, the total tax liability is increased to $374,000 (which is closest to choice C).

The Tax Liability of a Corporation with Ordinary Income of $1,100,000