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 tax liability can be calculated as follows: 
Taxable income = $100,000 
Tax = $22,250 (from the tax table for C corporations filing as single taxpayers)

For Magenta Corporation, since it is a qualified personal service corporation, the tax liability is calculated using a flat rate of 35% on all taxable income. 
Taxable income = $90,000 
Tax = $31,500 (35% of $90,000)

Therefore, the total corporate tax liability for both corporations is $54,750 ($22,250 + $31,500), and the correct answer is D.

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