Corporations face the following tax schedule:Taxable IncomeTax on Base of BracketPercentage on Excess aboveBase Up to $50,000$015%$50,000-$75,0007,50025%$75,000-$100,00013,75034%$100,000-$335,00022,25039%$335,000-$10,000,000113,90034%$10,000,000-$15,000,0003,400,00035%$15,000,000-$18,333,3335,150,00038%Over $18,333,3336,416,66735%Company Z has $65,000 of taxable income from its operations, $5,000 of interest income, and $30,000 of dividend income from preferred stock it holds in other corporations.What is Company Z's tax liability? Assume a 70% dividend exclusion for Tax on Dividends.$18,736$17,225$15,110$11,786$18,888

Step 1: Introduction to Corporate Income Tax:The corporate income tax refers to the government's…

Answered: Corporations face the following tax…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 9MC: Assume that a corporation has $100,000 of taxable income from operations plus $5,000 of interest...

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Corporations face the following tax schedule:

Taxable Income	Tax on Base of Bracket	Percentage on Excess above
Base Up to $50,000	$0	15%
$50,000-$75,000	7,500	25%
$75,000-$100,000	13,750	34%
$100,000-$335,000	22,250	39%
$335,000-$10,000,000	113,900	34%
$10,000,000-$15,000,000	3,400,000	35%
$15,000,000-$18,333,333	5,150,000	38%
Over $18,333,333	6,416,667	35%

Company Z has $65,000 of taxable income from its operations, $5,000 of interest income, and $30,000 of dividend income from preferred stock it holds in other corporations.

What is Company Z's tax liability? Assume a 70% dividend exclusion for Tax on Dividends.