Chapter 5.2, Problem LC

(a)

To determine

To calculate: The function of state tax in terms of federal tax if the rate of state tax is $5\%$, the rate of the federal tax is $30\%$, and before taxes the corporation has an income of $\$200,000$.

(b)

To determine

To calculate: The function of federal tax in terms of state tax if the rate of state tax is $5\%$, the rate of the federal tax is $30\%$, and before taxes the corporation has an income of $\$200,000$.

(c)

To determine

To calculate: The state tax and federal tax if the equations of federal tax is $f=0.3\left(200,000-s\right)$ and state income tax is $s=0.05\left(200,000-f\right)$.

(d)

To determine

To calculate: The amount of the bonus, federal tax, and the state tax for the corporation, if the bonus given to the employees is $20\%$ where the $20\%$ bonus is computed in the income after deducting the amount of bonus, the state tax, and the federal tax from the income of $\$200,000$.