Jurisdiction B levies a flat 7 percent tax on the first $5 million of annual corporate income. Required: Jersey Incorporated generated $4.1 million income this year. Compute Jersey’s income tax and determine its average and marginal tax rate on total income. Leray Incorporated generated $10 million income this year. Compute Leray’s income tax and determine Leray’s average and marginal tax rate on total income. What type of rate structure does Jurisdiction B use for its corporate income tax?

Jurisdiction B levies a flat 7 percent tax on the first $5 million of annual corporate income. Required: Jersey Incorporated generated $4.1 million income this year. Compute Jersey’s income tax and determine its average and marginal tax rate on total income. Leray Incorporated generated $10 million income this year. Compute Leray’s income tax and determine Leray’s average and marginal tax rate on total income. What type of rate structure does Jurisdiction B use for its corporate income tax?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The total or effective tax rate including federal and local taxes for most enterprises is in the range of 60 % to 80% Select one: 1)True 2)False
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Subject: accounting
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Multiple Choice $200,933 $174,983 $208,433 $172,509
Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required: State A $ 7,500,000 3,500,000 2,500,000 State B $ 4,750,000 2,700,000 1,550,000 Total $ 12,250,000 6,200,000 4,050,000 a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each state? Answer is not…
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1)During the year, CDE Corporation earned enough profits to pay dividends to its shareholders. CDE is a C corporation. What are the tax consequences of this distribution? The corporation will increase their earnings and profits by the amount distributed. The corporation will reduce its taxable income by the amount distributed to the shareholders. The corporation will pay a flat tax of 21% on the amount distributed. The shareholders also include their dividends received in taxable income. There are no direct tax consequences for either the corporation or the shareholders. 20 Choose the response that correctly describes a guaranteed payment. A loan payment from the partnership to pay back a loan from a partner. A loan payment from the partner to pay back a loan from a partnership. A payment made to a partner from the profits of the partnership. A payment made to a partner without regard to the income of the partnership. 3)Which of the following expenses may a partnership…
Relix, Inc., is a domestic corporation. Relix, Inc., reported two permanent differences between book and taxable income. It earned $2,375 in tax-exempt municipal bond interest, and it incurred $780 in nondeductible business meals expense. Relix's book income before tax is $4,800. Assume a 21% Federal corporate tax rate. Provide the information for the income tax footnote rate reconciliation for Relix. For dollar amounts, round to the nearest dollar and use rounded amounts in subsequent computations. For the percentage answers, round to four decimal places before converting to a percentage. For example, round .56329 to .5633 and enter as 56.33%. Dollars Percentage Tax on book income at U.S. statutory rate % Tax-exempt income % Nondeductible business meals % Provision for income tax expense %
Perk Corporation is subject to tax only in State A. Perk generated the following income and deductions. Federal taxable income $300,000State A income tax expense 15,000Refund of State A income tax 3,000Depreciation allowed for Federal tax purposes 200,000 Depreciation allowed for state tax purposes 120,000 Federal taxable income is the starting point in computing State A taxable income. State income taxes are not deductible for State A tax purposes. Determine Perk’s State A taxable income.