Use the Corporate Income Tax information above to answer this question. A corporation has a taxable income of $3,502,936. At this income level, the federal income rate is 54%, the state tax rate is 20%, and the local tax rate is 14%. If each tax rate is applied to the the total taxable income, the company would have to pay $3,502,936 * 0.14 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? Round to the nearest dollar.
Use the Corporate Income Tax information above to answer this question. A corporation has a taxable income of $3,502,936. At this income level, the federal income rate is 54%, the state tax rate is 20%, and the local tax rate is 14%. If each tax rate is applied to the the total taxable income, the company would have to pay $3,502,936 * 0.14 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? Round to the nearest dollar.
Chapter24: Multistate Corporate Taxation
Section: Chapter Questions
Problem 29P
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Transcribed Image Text:### Corporate Income Tax
A corporation's taxable income is taxed at the federal, state, and local levels. It is customary for an agency to deduct the taxes paid to the other agencies before computing the company's tax liability. For example, the federal taxes are based on the income that remains after the state and local taxes are deducted. Similarly, the state taxes are based on the income that remains after federal and local taxes are deducted; the local taxes are based on the income that remains after state and federal taxes are deducted.
![**Corporate Income Tax Calculation Example**
To understand how corporate income tax works, let’s consider the following example:
A corporation has a taxable income of $3,502,936. The corporation is subject to the following tax rates:
- Federal income tax rate: 54%
- State tax rate: 20%
- Local tax rate: 14%
If these tax rates are applied directly to the total taxable income, the calculation for local taxes would be:
\[ \text{Local taxes} = \$3,502,936 \times 0.14 \]
However, corporations are allowed to deduct the taxes paid when calculating their final tax obligation. This example illustrates how to determine the amount paid in local taxes when these customary deductions are taken into account.
**Task:**
Calculate and fill in the amount paid in local taxes, rounding to the nearest dollar.
\[ \$ \_\_\_\_\_\_\_\_\_\_. \]
Please enter your answer in the provided space below.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2d9df1eb-9cbe-4888-87d6-c14249115dd3%2F6bb1b44d-64e6-448d-bb22-f2f7cae0d8b6%2F1c4g0v_processed.png&w=3840&q=75)
Transcribed Image Text:**Corporate Income Tax Calculation Example**
To understand how corporate income tax works, let’s consider the following example:
A corporation has a taxable income of $3,502,936. The corporation is subject to the following tax rates:
- Federal income tax rate: 54%
- State tax rate: 20%
- Local tax rate: 14%
If these tax rates are applied directly to the total taxable income, the calculation for local taxes would be:
\[ \text{Local taxes} = \$3,502,936 \times 0.14 \]
However, corporations are allowed to deduct the taxes paid when calculating their final tax obligation. This example illustrates how to determine the amount paid in local taxes when these customary deductions are taken into account.
**Task:**
Calculate and fill in the amount paid in local taxes, rounding to the nearest dollar.
\[ \$ \_\_\_\_\_\_\_\_\_\_. \]
Please enter your answer in the provided space below.
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