(Calculating corporate income tax) Last year the commercial real estate firm Kelly and Co., Inc., earned...

(Calculating corporate income tax) Last year the commercial real estate firm Kelly and Co., Inc., earned taxable income of $19 million. Calculate Kelly’s federal income taxes. Now calculate Kelly’s average and marginal tax rates.

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Expert Solution

Taxable income of Kelly and Co., Inc., - $19 million

To calculate tax liability (refer the Corporate Tax Rates schedule)

$19 million falls into over 18,333,333 tax bracket which has 35% of tax rate

Therefore the corporate tax = marginal tax rate * taxable income

= 35% * $19,000,000

= $6,650,000

Therefore Kelly federal income tax Liability is $6,650,000

The company's marginal and average tax rates on taxable income are

Company’s marginal tax rate is 35%.

Average tax rate = Income tax Liability / Taxable income

Average Tax Rate = $6,650,000/$19,000,000 = 35.00%

Therefore company's marginal and average tax rates both are 35%

jeff jeffy answered 1 month ago

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