Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
Problem 8P
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Question
A corporation has a taxable income of $2,039,602. At this income level, the federal income rate is 50%, the state tax rate is 20%, and the local tax rate is 11%. If each tax rate is applied to the the total taxable income, the company would have to pay $2,039,602 * 0.11 in local taxes. Luckily for the corporation, the taxes paid are deducted as described above. How much is paid in local taxes if the customary deductions are taken into consideration?
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