To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001 Introduction: Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows: Taxable income Tax rate $0 to $50,000 15% $50,001 to $75,000 25% $75,001 to $100,000 34% $100,001 to $335,000 39% $335,001 to $10,000,000 34% $10,000,001 to $15,000,000 35% $15,000,001 to $18,333,333 38% $18,333,334 and above 35%

Question

Want to see the full answer?

Answer 1

Question

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Banking and finance sector ma job kaise paye

1. Bond X is worth $91 today. The bond will mature in one year and pay $100 or $84 with probabilities 0.75 and 0.25, respectively. Assuming the bond pays no cash flows during the year, which of the following is closest to the expected return on the bond? 5% 0% 0% 5% 0% 2. At the beginning of the year, a mutual fund has a NAV of $20. At the end of the year, the NAV is $21 and the fund has received no dividends or other distributions throughout the year. The return on the fund’s benchmark over the same period of time was 10%. Suppose the fund incurred expenses of $2 per fund share during the year. What was the return on the fund’s underlying portfolio before any expenses that affected NAV? Did this before-expense return beat the fund’s benchmark? 15%; Yes, the fund’s underlying portfolio beat its benchmark 15%; No, the fund’s underlying portfolio beat its benchmark 0%; No, the fund’s underlying portfolio beat its benchmark 20%; Yes, the fund’s underlying portfolio beat its benchmark…

1. Which of the following assets is most likely to trade over the counter but still have high liquidity? a. A short-term Treasury bond b. A long-term corporate bond c. A short-term corporate bond d. A large-cap stock e. A small-cap stock 2. Assume you purchased 600 shares of XYZ common stock on margin at $35 per share from your broker. If the initial margin is 60%, the amount you borrowed from the broker is closest to _________. a. $8,500 b. $21,000 c. $29,500 d. $12,500 e. $16,000 3. You invest $1,550 in security A with a beta of 1.4 and $1,350 in security B with a beta of 0.4. The beta of this portfolio is closest to _____________ . a. 0.95 b. 0.90 c. 1.35 d. 1.05 e. 1.15 4. Which of the following orders is most likely to increase the difference between the highest bid price and the lowest ask price? a. A large market order b. A large limit order c. A small limit order d. A small market order e. There will be no major difference between these 5. Bond X is worth $91 today.…

Answer 2

Question

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Answer 6

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

Answer 7

Chapter 2, Problem 24QP

a)

Summary Introduction

To critically think about: The reason why the tax rate rises to 39 percent from 34 percent when the taxable income is $100,001 and falls to 34 percent when the income is 335,001

Introduction:

Income tax refers to the charge levied by the government on the income of the company. The company has a legal obligation to pay taxes. The tax rate differs based on the income of the company. The tax rate is as follows:

Taxable income Tax rate

$0 to $50,000 15%

$50,001 to $75,000 25%

$75,001 to $100,000 34%

$100,001 to $335,000 39%

$335,001 to $10,000,000 34%

$10,000,001 to $15,000,000 35%

$15,000,001 to $18,333,333 38%

$18,333,334 and above 35%

Answer 8

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

Answer 9

b)

Summary Introduction

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

Answer 10

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Answer 11

c)

Summary Introduction

To determine: The new tax bubble, if the threshold of 39 percent tax bracket is reduced from $335,000 to $200,000

Introduction:

Tax bubble refers to the rise in the marginal tax rate in order to match the average tax rate. The 38 percent tax bracket and the 39 percent tax bracket are tax bubbles because they help to maintain the average tax rate of 34 percent and 35 percent respectively.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 2.1 - Prob. 2.1ACQ Ch. 2.1 - What is liquidity? Why is it important?Ch. 2.1 - What do we mean by financial leverage?Ch. 2.1 - Explain the difference between accounting value...Ch. 2.2 - What is the income statement equation?Ch. 2.2 - Prob. 2.2BCQ Ch. 2.2 - Why is accounting income not the same as cash...Ch. 2.3 - What is the difference between a marginal and an...Ch. 2.3 - Do the wealthiest corporations receive a tax break...Ch. 2.4 - Prob. 2.4ACQ

*Taxable income*	*Tax rate*
$0 to $50,000	15%
$50,001 to $75,000	25%
$75,001 to $100,000	34%
$100,001 to $335,000	39%
$335,001 to $10,000,000	34%
$10,000,001 to $15,000,000	35%
$15,000,001 to $18,333,333	38%
$18,333,334 and above	35%

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a) Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.

Want to see the full answer?

Chapter 2 Solutions

To compute: The average tax rate when the taxable income is $335,001 and $18,333,334 and to confirm the answer in Part (a)

Introduction: The average tax rate refers to the total tax bill divided by the total taxable income.