Chapter-2
Q1) if you were a financial manager and your firm's taxable income is $120,000, try to find
answers for the following questions for your firm.
Tax calculation
Range of taxable income
Base tax
+ (Marginal rate × amount over base bracket)
$ 0 to $ 50,000
$ 0 + (15% × amount over
$ 0)
50,000 to 75,000
7,500 + (25 × amount over 50,000)
75,000 to 100,000
13,750 + (34 × amount over 75,000)
100,000 to 335,000
22,250 + (39 × amount over 100,000)
335,000 to 10,000,000
113,900 + (34 × amount over 335,000)
10,000,000 to 15,000,000
3,400,000 + (35 × amount over 10,000,000)
15,000,000 to 18,333,333
5,150,000 + (38 × amount over 15,000,000)
Over 18,333,333
6,416,667 + (35 × amount over 18,333,333)
1. What tax range your firm is in?
2. What is the base tax for your firm at this level of income?
3. What is the marginal tax rate for your firm at this level?
4. What is your tax liability for your level of income?
5. What is the average tax rate applicable for your firm?