Question

Andrews corporation has income from operations of $227,000. in addition, it received interest income of $22,700 and received dividend income of $30,100 from another corporation. finally, it paid $10,900 of interest income to its bondholders and paid $47,500 of dividends to its common stockholders. using the 2013 corporate tax schedule, what is the firm's federal income tax

Answer 1

Based on the various incomes of Andrews Corporation, their federal income tax according to the 2013 schedule was $79,903.70.

What is the Taxable income?

The taxable income can be found as:

= Income from operations + Interest income + Dividend income - Interest income

Dividend income is only 30% taxable.

= 227,000 + 22,700 + (30,100 x 30%) - 10,900

= $247,830

Firm federal income tax

Falls in the $100,000 to $335,000 bracket. Tax will be:

= 22,250 + (Excess over $100,000 x 39%)

Solving gives:

= 22,250 + ( (247,830 - 100,000) x 39%)

= $79,903.70

In conclusion, their tax is $79,903.70.

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