A company wants to set up a new office in a country where the corporate tax rate is: 15% of first $50,000 of taxable income; 25% of the next $25,000; 34% of next $25,000 of taxable income; and 39% of any taxable income over $100,000. Executives estimate that they will have gross revenues of $500,000; total costs of $300,000; $30,000 in allowable tax deductions; and they are eligible for a one-time business start-up tax credit of $8,000.

What is taxable income for the first year, and how much should the company expect to pay in taxes?

Respuesta :

Answer:

Total tax payable is $46430

Explanation:

We have given total gross revenue = $500000

Total cost = $300000

Allowable tax deduction = $30000

Startup tax credit = $8000

Total taxable income = Total revenue - ( total cost +total deduction + startup credits)

= $500000 - ($300000+$30000+$8000) = $162000

Now total tax [tex]=(0.15\times 50000+0.25\times 25000+0.34\times 25000+0.39\times 62000)=$46430[/tex]

Therefore total tax payable = $46430