Need help to learn how to calculate the tax liability, after-tax earnings, and average tax rates for the following levels of corporate earnings before taxes:$7,700; $81,100; $304,000; $499,000;$1.9 million; $9.8 million; and $19.8 million.b. Plot the average tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). What generalization can be made concerning the relationship between these variables? Attached is the chart Corporate Tax Rate ScheduleTax calculationRange of taxable income$0 to(Marginal rate x amount over base bracket)$0)50,000)Base tax+$50,000$0x amount over(15%(25%(34%(39%(34%(35%(38%(35%+50,000 tox amount over75,000100,000335,0007,500+x amount overx amount over75,000)100,000)335,000)10,000,000)15,000,000)18,333,333)75,000 to13,75022,250100,000 tox amount over335,000 to10,000,000 to10,000,000113,900+15,000,0003,400,000+x amount over15,000,000 toOver 18,333,333x amount overx amount over18,333,3335,150,0006,416,667+

Tax Liability: It is the amount of tax debt which owe to tax authorities(Government authorities).…

Answered: Need help to learn how to calculate the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Need help to learn how to calculate the tax liability, after-tax earnings, and average tax rates for the following levels of corporate earnings before taxes:

$7,700; $81,100; $304,000; $499,000;$1.9 million; $9.8 million; and $19.8 million.

b. Plot the average tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). What generalization can be made concerning the relationship between these variables?

Attached is the chart

Corporate Tax Rate Schedule
Tax calculation
Range of taxable income
$0 to
(Marginal rate x amount over base bracket)
$0)
50,000)
Base tax
+
$50,000
$0
x amount over
(15%
(25%
(34%
(39%
(34%
(35%
(38%
(35%
+
50,000 to
x amount over
75,000
100,000
335,000
7,500
+
x amount over
x amount over
75,000)
100,000)
335,000)
10,000,000)
15,000,000)
18,333,333)
75,000 to
13,750
22,250
100,000 to
x amount over
335,000 to
10,000,000 to
10,000,000
113,900
+
15,000,000
3,400,000
+
x amount over
15,000,000 to
Over 18,333,333
x amount over
x amount over
18,333,333
5,150,000
6,416,667
+

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