Ch13Solutions

Ch13Solutions - .1 Graduated rates higher taxable incomes...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 13 13.1 Graduated rates: higher taxable incomes pay taxes at higher rates. Marginal rate: The portion of each taxable dollar of TI that is paid in taxes, e.g., 34%. Indexing: Updating of the TI limits (not the rates) each year to account for inflation and other factors. 13.2 (a) Doubleday: T e = 9.2 + (1-0.092)(34) = 40.07% TI (in millions) = 2.8 + 0.9 1.4 0.85 = $1.45 Merritt-Douglas: T e = 7.5 + (1-0.075)(34) = 38.95% TI (in millions) = 4.7 + 0.25 3.1 0.97 = $0.88 (b) Use the average federal tax rate of 34%, not the total effective rate T e. Doubleday: Federal tax estimate = 1,450,000(0.34) = $493,000 Merritt-Douglas: Federal tax estimate = 880,000(0.34) = $299,200 (b) Doubleday: Taxes = 113,900 + 0.34(1,450,000 335,000) = $493,000 Percent of revenue = 493,000/3.7 million = 13.3% Merritt-Douglas: Taxes = 113,900 + 0.34(880,000 335,000) = $299,200 Percent of revenue = 299,200/4.95 million = 6.0% Doubleday M-D T e 40.07% 38.95% TI $1,450,00 $880,000 Tax estimate $493,000 $299,200 Tax (table) $493,000 $299,200 % revenue 13.3% 6.0% 13.3 (a) T e = 9.8 + (1 0.098)(31%) = 37.76% TI = 4.9 2.1 1.4 = $1.4 million Tax estimate = 1.4 million(0.3776) = $528,640 (b) 528,640/4.9 million = 10.8% 13.4 (a) TI = 320,000 149,000 95,000 = $76,000 (b) Use Table 13-1 13- 1 Taxes = 13,750 + 0.34(76,000-75,000) = $14,090 (c) T e = 10.5 + (1 0.105)(18.5 = 27.06% Tax estimate = 76,000(0.2706) = $20,566 Percent of GI = 20,566/320,000 = 6.43% 13.5 Corporation: TI = GI expenses depreciation Individual: TI = Salaries and wages personal exemptions deductions Some differences are: Depreciation versus deductions (no depreciation for individuals) Business expenses versus exemptions (corporation has expense advantage) GI from sales versus salaries and wages 13.6 Single: Use tax rates for filing single in Table 13-2. TI = 75,000 + 5000 8450 = $71,550 Taxes = 0.10(7825) + 0.15(31,850-7825) + 0.25(71,550-31,850) = 782.50 + 3603.75 + 9925 = $14,311 Total taxes are 2(14,311) = $28,622 Married: Use tax rates for filing married and jointly in Table 13-2. TI = 150,000 + 10,000 16,900 = $143,100 Taxes = 0.10(15,650) + 0.15(63,700-15,650) + 0.25(128,500-63,700) + 0.28(143,100-128,500) = 1565 + 7207.50 + 16,200 + 4088 = $29,060 Marriage penalty is 29,060 28,622 = $438 13.7 (a) Using effective rate of 25% to estimate taxes. Ads++: TI = 173,000 58,000 10,000 = $105,000 Tax estimate = 0.25(105,000) = $26,250 Single: TI = 95,000 3300 5150 = $86,550 Tax estimate = 0.25(86,550) = $21,638 13- 2 (b) Using tax rate Tables 13-1 (corporate) and 13-2 (filing single). Ads++: TI = $105,000 Taxes = 22,250 + 0.39(105,000-100,000) = $24,200 Single: TI = $86,550 Taxes = 0.10(7825) + 0.15(31,850-7825) + 0.25(77,100-31,850) + 0.28(86,550-77,100) = 783 + 3604 + 11,313 + 2646 = $18,346 The 25% estimated rate is too high since both corporate and individual tax estimates are higher than the tax table amounts.estimates are higher than the tax table amounts....
View Full Document

This note was uploaded on 03/24/2011 for the course ISEN 302 taught by Professor Ko during the Spring '08 term at Texas A&M.

Page1 / 20

Ch13Solutions - .1 Graduated rates higher taxable incomes...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online