Chapter 12A, Problem 1P

To determine

(a)

The federal tax to be paid.

Answer to Problem 1P

Tax amount is $\$500$.

Explanation of Solution

Given:

Taxable income is $\$5000$.

Concept used:

Tax slab rates for single taxpayers are as follows.

Taxable income over	But not over	Tax	Of the amount over
$\$0$	$\$8700$	$10\%$	$\$0$
$\$8700$	$\$35350$	$\$870+15\%$	$\$8700$
$\$35350$	$\$85650$	$\$4867.50+25\%$	$\$35350$
$\$85650$	$\$178650$	$\$17442.50+28\%$	$\$85650$
$\$178650$	$\$388350$	$\$43482.50+33\%$	$\$178650$
$\$388350$		$\$112683.50+35\%$	$\$388350$

Table-(1).

Calculation:

Calculate the federal income tax payable from Table-(1).

$\begin{array}{c}T=\$5000\times 10\%\\ =\$500\end{array}$

Here, the tax amount is T.

Conclusion:

Tax amount is $\$500$.

To determine

(b)

The federal tax to be paid.

Answer to Problem 1P

Tax amount is $\$2565$.

Explanation of Solution

Given:

Taxable income is $\$20000$.

Calculation:

Calculate the federal income tax payable from Table-(1).

$\begin{array}{c}T=\$870+15\%\left(\$20000-\$8700\right)\\ =\$2565\end{array}$.

Conclusion:

Tax amount is $\$2565$.

To determine

(c)

The federal tax to be paid.

Answer to Problem 1P

Tax amount is $\$20060.5$.

Explanation of Solution

Given:

Taxable income is $\$95000$.

Calculation:

Calculate the federal income tax payable from Table-(1).

$\begin{array}{c}T=\$17442.50+28\%\left(\$95000-\$85650\right)\\ =\$20060.5\end{array}$.

Conclusion:

Tax amount is $\$20060.5$.

To determine

(d)

The federal tax to be paid.

Answer to Problem 1P

Tax amount is $\$100028$.

Explanation of Solution

Given:

Taxable income is $\$350,000$.

Calculation:

Calculate the federal income tax payable from Table-(1).

$\begin{array}{c}T=\$43482.50+33\%\left(\$350,000-\$178650\right)\\ =\$100028\end{array}$.

Conclusion:

Tax amount is $\$100028$.

To determine

(e)

The federal tax to be paid.

Answer to Problem 1P

Tax amount is $\$326761$.

Explanation of Solution

Given:

Taxable income is $\$1\text{million}$.

Calculation:

Calculate the federal income tax payable from Table-(1).

$\begin{array}{c}T=\$112683.50+35\%\left(\$1,000,000-\$388350\right)\\ =\$326761\end{array}$.

Conclusion:

Tax amount is $\$326761$.