Question

Green Corporation reported pretax book income of $1,024,000. During the current year, the net reserve for warranties increased by $51,200. In addition, tax depreciation exceeded book depreciation by $106,000. Finally, Green subtracted a dividends received deduction of $25,600 in computing its current-year taxable income. Green's cash tax rate is:

Answer 1

92.15%

Step-by-step explanation:

Calculation for Green's cash tax rate

First step is to calculate the taxes payable

Taxes payable=$1,024,000+$51,200-$106,000-$25,600

Taxes payable=$943,600

Now let calculate the cash tax rate

Using this formula

Cash tax rate=Taxes payable/Pretax book income

Let plug in the formula

Cash tax rate=$943,600/$1,024,000

Cash tax rate=0.9215*100

Cash tax rate=92.15%

Therefore the Cash tax rate is 92.15%