Two unrelated,calendar year C corporations have the following taxable income for the current year: Magenta Corporation is a qualified personal service corporation.Based on these facts,their corporate tax liability is:

Question

Two unrelated,calendar year C corporations have the following taxable income for the current year:  Magenta Corporation is a qualified personal service corporation.Based on these facts,their corporate tax liability is:

Quizplus · Accepted Answer

For Olive Corporation, the taxable income falls within the 15% tax bracket for corporations, which is up to $50,000 in taxable income. Therefore, the tax liability for Olive Corporation is $50,000 x 0.25 = $12,500.

For Magenta Corporation, being a qualified personal service corporation, the tax rate is a flat 35% on all taxable income. Therefore, the tax liability for Magenta Corporation is $90,000 x 0.35 = $31,500.

Thus, the correct answer is D) $12,500 for Olive and $31,500 for Magenta.

Two Unrelated,calendar Year C Corporations Have the Following Taxable Income