## Tax Liability and Earnings Analysis### Instructions:Using the individual tax rate schedule, perform the following calculations:#### a. Calculate the Tax Liability, After-Tax Earnings, and Average Tax Rates for Various Earnings Levels- **Earnings Levels Before Taxes:** - $14,900 - $75,700 - $304,000 - $492,000 - $1.1 million - $1.5 million - $2.3 million- **Format:** - Round dollars to the nearest cent and percentages to one decimal place.| Before-Tax Earnings | Tax Liability | After-Tax Earnings | Average Tax Rate ||---------------------|---------------|--------------------|------------------|| $14,900 | $ | $ | % | #### b. Plot Analysis- Plot the **Average Tax Rates** against the **Pretax Income Levels**.- Discuss the general relationships observed.### Tax Rate and Bracket Information#### Table 1.2: Federal Income Tax Rates and Brackets for Individual Returns (2018)| Tax Rates | Taxable Income | Taxes ||-----------|------------------------|---------------------------------------------------------|| 10.0% | $0 to $9,875 | 10% of taxable income || 12.0% | $9,876 to $40,125 | $987.50, plus 12% of the amount over $9,875 || 22.0% | $40,126 to $85,525 | $4,617.50, plus 22% of the amount over $40,125 || 24.0% | $85,526 to $163,300 | $14,605.50, plus 24% of the amount over $85,525 || 32.0% | $163,301 to $207,350 | $33,271.50, plus 32% of the amount over $163,300 || 35.0% | $207,351 to $518,400 | $47,367.50, plus 35% of the amount over $207,350 || 37.0% | Over $518,401 | $156,235.50, plus 37

Using the individual tax rate schedule, perform the following: a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $14,900; $75,700; $304,000; $492,000; $1.1 million; $1.5 million; and $2.3 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis). What generalization can be made concerning the relationship between these variables?

Using the individual tax rate schedule, perform the following: a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $14,900; $75,700; $304,000; $492,000; $1.1 million; $1.5 million; and $2.3 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis). What generalization can be made concerning the relationship between these variables?

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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