Chapter 2 The Financial Market Environment

Question

20) Meese Paper Distributors, Inc. has before-tax earnings of $1,900,000. Calculate the amount of the total tax liability.

Range of taxable income Marginal rate

$ 0 to $ 50,000 15%

50,000 to 75,000 25

75,000 to 100,000 34

100,000 to 335,000 39

335,000 to 10,000,000 34

10,000,000 to 15,000,000 35

15,000,000 to 18,333,333 38


21) During 2002, a firm has sold 5 assets described below. Calculate the tax liability on the assets. The firm pays a 40 percent tax rate on ordinary income.

Chapter 2   The Financial Market Environment

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