VLOOKUPB32taxtable3 Next put the pointer on D51 get the VLOOKUP menu box and

# Vlookupb32taxtable3 next put the pointer on d51 get

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=VLOOKUP(B32,taxtable,3) Next, put the pointer on D51, get the VLOOKUP menu box, and look up the marginal tax rate. The correct value is 35%, and here is the formula: =VLOOKUP(B32,taxtable,4) Next, put the pointer on D52 and look up the marginal tax bracket and then subtract it from the firm's income to find the incremental income. Here is the formula: =B32-VLOOKUP(B32,taxtable,1) Finish by adding the tax on the marginal income to the tax on the bracket base. Taxable Income: \$12,000,000 Corporate Tax Rates for 2000 If a corporation's It pays this Plus this percentage taxable income amount on the on the excess is between: base of the bracket over the base (1) (2) (3) (4) \$0 \$50,000 \$0 15.0% \$50,000 \$75,000 \$7,500 25.0% \$75,000 \$100,000 \$13,750 34.0% \$100,000 \$335,000 \$22,250 39.0% \$335,000 \$10,000,000 \$113,900 34.0% \$10,000,000 \$15,000,000 \$3,400,000 35.0% \$15,000,000 \$18,333,333 \$5,150,000 38.0% \$18,333,333 and up \$6,416,667 35.0% 1st VLOOKUP to find the base amount of tax: \$3,400,000 2nd VLOOKUP to find the marginal tax rate: 0.35 3rd VLOOKUP to find the marginal income to be taxed: \$2,000,000 \$700,000 Total tax liability: \$4,100,000
Individual Tax Table for the 2001 Tax Year If an individual's He/she pays this Plus this percentage Average tax taxable income amount on the on the excess rate at is between: base of the bracket over the base top of bracket (1) (2) (3) (4) (5) \$0 \$27,050 \$0.00 15.0% 15.0% \$27,050 \$65,550 \$4,057.50 27.5% 22.3% \$65,550 \$136,750 \$14,645.00 30.5% 26.6% \$136,750 \$297,350 \$36,361.00 35.5% 31.4% \$297,350 and up \$93,374.00 39.1% 39.1% Married (Joint Return) Tax Table for the 2001 Tax Year If a couple's It pays this Plus this percentage Average tax taxable income amount on the on the excess rate at is between: base of the bracket over the base top of bracket (1) (2) (3) (4) (5) \$0 \$45,200 \$0.00 15.0% 15.0% \$45,200 \$109,250 \$6,780.00 27.5% 22.3% \$109,250 \$166,500 \$24,393.75 30.5% 25.1% \$166,500 \$297,350 \$41,855.00 35.5% 29.7% \$297,350 and up \$88,306.75 39.1% 39.1% Other Tax Data: Exemption phase-out begins for: Individuals Married Exemption per person = \$2,900 \$132,950 \$199,450 Capital gains rate (most investments) = 20% Standard deduction (individual) = \$4,550 Phase-out begins: \$132,950 Standard deduction (married filing joint) = \$7,600 Phase-out begins: \$132,950 Base on social security (OASDI)= \$80,400 Rate on social security (OASDI, payroll)= 6.2% Rate on social security (OASDI, self-employed)= 12.4% Rate on medicare (payroll) = 1.45% Rate on medicare (self-employed) = 2.90% Note: For individuals in 2001 there is actually a tax bracket of 10% for income less than \$6000, but the impact of the benefit was accomplished with a tax rebate of \$300 for individuals. Note: For married filing joint returns in 2001 there is actually a tax bracket of 10% for income less than \$12000, but the impact of the benefit was accomplished with a tax rebate of \$600 for married filing joint returns.
Example Find the tax, the marginal tax rate, and the average tax rate for the following situation. Taxable Income: \$35,000 Base taxable income: \$27,050.00 Base tax: \$4,057.50 Marginal tax rate: 27.5% Tax: \$6,243.75 Average tax rate: 17.8% Returns to Investor under Bond and Stock Financing Use Bonds Use Stock (1) (2) Sales \$5,000,000 \$5,000,000 Operating costs 3,500,000 3,500,000 Earnings before interest and taxes (EBI \$1,500,000 \$1,500,000 Interest 1,500,000 0 Taxable income \$0 \$1,500,000 Federal-plus-state taxes (40%) 0 600,000 After-tax income \$0 \$900,000 Income to investors \$1,500,000 \$900,000 Rate of return on \$10 million of assets 15% 9% Apex Corporation: Calculation of \$12 million Loss Carry-Back and Amount Available for Carry-Forward Past Year Past Year Curent Year 2001 2002 2003 Original taxable income \$2,000,000 \$2,000,000 -\$12,000,000 Carry-back credit 2,000,000 2,000,000 Adjusted profit \$0 \$0 Taxes previously paid (40%) 800,000 800,000 Difference = Tax refund due \$800,000 \$800,000

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