The Talley Corporation had taxable operating income of $395,000 (i.e., earnings from operating revenues minus all...

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.

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Expert Solution

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

ekkarill92 answered 2 years ago

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