Your corporation has the following cash flows: If 70 percent of dividends received are excludable, and if the applicable tax table is as follows, What is the corporation's tax liability?

Question

Your corporation has the following cash flows:  If 70 percent of dividends received are excludable, and if the applicable tax table is as follows,  What is the corporation's tax liability?

Quizplus · Accepted Answer

First, we need to calculate the taxable income of the corporation by subtracting the excludable portion of dividends from the total income:

Total income = $220,000 + $80,000 = $300,000
Excludable portion = 0.7 x $80,000 = $56,000
Taxable income = $300,000 - $56,000 = $244,000

Next, we need to use the tax table to calculate the tax liability:

First $50,000 at 15% = $7,500
Next $50,000 at 25% = $12,500
Next $49,000 at 34% = $16,660
Remaining $95,000 at 39% = $37,050

Total tax liability = $7,500 + $12,500 + $16,660 + $37,050 = $69,440

Therefore, the answer is C.

Your Corporation Has the Following Cash Flows: If 70