In: Finance
The Talley Corporation had a taxable income of $335,000 from operations after all operating costs but before (1) interest charges of $67,000, (2) dividends received of $16,750, (3) dividends paid of $20,100, and (4) income taxes.
What are the firm's income tax liability and its after-tax income? Round your answers to two decimal places.
Income tax liability | $ |
After-tax income | $ |
What are the company's marginal and average tax rates on taxable income? Round your answers to two decimal places.
Marginal tax rate | 39% |
Average tax rate | % |
1.Income after operating costs: $335,000
Less: Interest expense -$67,000
Add: Dividends received (only
30% of the dividends are taxable) $5,025
Taxable income. $273,025
2.Since $273,025 falls under the $100,000 to $335,000 tax bracket,
the tax would be: $22,250 + 0.39*($273,025 - $100,000)
= $22,250 + $67,479.75
= $89,729.75.
3.Marginal tax rate = 39%
Average tax rate = $89,729.75 / $273,025
= 0.3287*100
= 32.87%.