Question

The Mago-Net Company has an annual gross income of $72,173. Deductions total $5,224. What is the federal corporate income tax?

Answer 1

Taxable income = annual gross income-Deductions = 72173-5224= 66949
Federal corporate income tax = 7500+(66949-50000)*25%= 11737.25

Answer 2

$11737.25

Explanation:

We have been given a tax table and we are asked to find the amount o federal corporate income tax for a company having an annual gross income of $72,173 and deductions total $5,224.

First of all, we will subtract deductions from annual gross income to get total taxable income.

`\text{Total taxable income}=\$72,173-\$5,224`

`\text{Total taxable income}=\$66,949`

Upon looking at our given table, we can see that $66,949 lies in second row of taxable income as $66,949 is between $50,000-$75,000.

The amount of federal corporate income tax would be $7,500 plus 25% of amount over $50,000 that would be $16,949 ($66,949-$50,000).

`\text{The federal corporate income tax}=\$7,500+((25)/(100)* \$16,949)`

`\text{The federal corporate income tax}=\$7,500+(0.25* \$16,949)`

`\text{The federal corporate income tax}=\$7,500+\$4,237.25`

`\text{The federal corporate income tax}=\$11737.25`

Therefore, the amount of the federal corporate income tax is $11737.25.