Problem:
The Analtoly Corporation is an electronics dealer. Sales for the last year $ 4.5 million, and costs of goods sold and operating expenses totaled $ 3.2 million. Analtoly also paid $150,000 in interest expense, and depreciation expense totaled $ 50,000. In addition, the company sold securities for $ 120,000 that it purchased 4 years earlier at a price of $40,000. Compute the taxable income and tax liability for Analtoly.
Taxable income is basically determined as income less allowable exclusions and tax-deductible expenses
Seventy percent of any dividends received from another corporation are tax exempt
Dividends paid by the corporation to its stockholders are not tax deductible
Corporate rate structure:
15% $0 - $50,000
25% $50,001 - $75,000
34% $75,001 - 100,000
There is an added tax of 5% for income between $100,000 and $335,000.
There is also an additional added tax of 3% on income between $15 million and $18 1/3 million.