Chapter 4 Solution Set

# Chapter 4 Solution - Chapter 4 Solution Set 1 \$33,975 \$4,850(standard deduction \$3,100(single exemption = \$26,025 Using Table 4.2 pg 94 the tax on

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Chapter 4 Solution Set 1) \$33,975 - \$4,850 (standard deduction) - \$3,100 (single exemption) = \$26,025 Using Table 4.2 pg 94, the tax on \$26,025 = 0.10(7150) + 0.15(26025-7150) = 715 + 2831.25 = \$3,546.25 The average tax rate is 3546.25 / 33975 = 0.10438 = 10.44% The marginal tax rate is 25% 2) a) 15% b) 15% c) 15% d) 28% 3) Gross income \$39,400 + \$90 \$39,490 Less adjustment: qualified retirement plan 1,000 Adjusted gross income \$38,490 Less standard deduction (higher than itemized) 4,850 Subtotal \$33,640 Less single exemption 3,100 Taxable income \$30,540 Using Table 4.2 pg 94, the tax on \$30,540 = 0.10(7150) + 0.15(29050-7150) + 0.25(30540-29050) = 715 + 3285 + 372.50 = \$4,372.50 The average tax rate is 4372.50 / 39490 = 0.11072 = 11.07% The marginal tax rate is 25% 4) Gross income 234,000+222,500+11,140 \$467,640 Less adjustment: qualified retirement plan 60,000 Adjusted gross income \$407,640 Less itemized deductions 26,150 Subtotal \$381,490 Less exemptions 6,200 Taxable income \$375,290

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## This note was uploaded on 08/27/2008 for the course FIN 200 taught by Professor Delcorral during the Spring '08 term at Loyola New Orleans.

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Chapter 4 Solution - Chapter 4 Solution Set 1 \$33,975 \$4,850(standard deduction \$3,100(single exemption = \$26,025 Using Table 4.2 pg 94 the tax on

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