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me3232-F10-hw7 - ME 3232 Homework#7 due 1 Tiger...

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ME 3232 Homework #7, due 11/5/10 1. Tiger Construction company had a gross income of $20,000,000 in tax year 1, $3,000,000 in salaries, $4,000,000 in wages, $800,000 in CCA, a loan principal payment of $200,000, and a loan interest payment of $210,000. Determine the net income of the company in tax year 1 if Tiger’s tax rate is 40%. 2. Buffalo Ecology Corporation is an Ontario based company which expects to generate a taxable income of $250,000 from its regular business in the current tax year. The company is considering a new venture: cleaning up oil spills made by fishing boats in lakes. This new venture is expected to generate additional taxable income of $150,000. Do the following assuming Buffalo Ecology is eligible for the small business deduction. (Tax rates: fed small bus. 12%, fed 21%, prov. small bus. 5%, prov. 15.5%) (a) Determine the firm’s marginal tax rates before and after the venture. (b) Determine the firm’s average tax rates before and after the venture. 3. Elway Aerospace Company of Winnipeg, Manitoba is a Canadian controlled manufacturing company. Last year, it had gross revenues of $1,200,000 from operations.
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