In: Accounting
The Talley Corporation had taxable operating income of $395,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $40,000, (2) dividends received of $10,000, and (3) dividends paid of $20,000. Its federal tax rate was 21% (ignore any possible state corporate taxes).
Recall that 50% of dividends received are tax exempt. What is the firm’s taxable income? Round your answer to the nearest dollar. $
What is the tax expense? Round your answers to the nearest dollar. $
What is the after-tax income? Round your answers to the nearest dollar.
Income after operating costs: | 395000 |
Less: Interest Expense | 40000 |
Plus: Taxable Dividends Received Only 50% of the $10000 in dividends are taxable | 5000 |
Taxable Income: | $360000 |
Tax expense (21%*360000) | 75600 |
After tax income (395000-40000+10000-75600) | $289400 |