Principles of Taxation for Business and Investment Planning 2020 Edition
23rd Edition
ISBN: 9781260433210
Author: Jones, Sally
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 13, Problem 1QPD
Why does a corporation’s state income tax cost depend on its marginal income tax rate for federal purposes?
Expert Solution & Answer
To determine
Explain the reason for which the corporation’s state income tax cost depends on income tax rate for federal purposes.
Explanation of Solution
- Corporations could deduct state income tax paid during the calculation of federal taxable income.
- Thus, the after-tax cost of the state tax payment should reveal the federal tax savings from the deduction, which is a task of the corporation’s marginal tax rate.
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Chapter 13 Solutions
Principles of Taxation for Business and Investment Planning 2020 Edition
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