Company K operates in a jurisdiction that levies an income tax with the following rate structure: Percentage Rate Bracket 7% Income from −0− to $75,000 10 Income from $75,001 to $150,000 15 Income in excess of $150,000 Company K incurs a $23,600 deductible expense. Required: Compute the current year tax savings from the deduction assuming that Company K’s taxable income before considering the additional deduction is $69,200. Compute the current year tax savings from the deduction assuming that Company K’s taxable income before considering the additional deduction is $170,800. Compute the current year tax savings from the deduction assuming that Company K has a $5,100 loss before considering the additional deduction.
Company K operates in a jurisdiction that levies an income tax with the following rate structure: Percentage Rate Bracket 7% Income from −0− to $75,000 10 Income from $75,001 to $150,000 15 Income in excess of $150,000 Company K incurs a $23,600 deductible expense. Required: Compute the current year tax savings from the deduction assuming that Company K’s taxable income before considering the additional deduction is $69,200. Compute the current year tax savings from the deduction assuming that Company K’s taxable income before considering the additional deduction is $170,800. Compute the current year tax savings from the deduction assuming that Company K has a $5,100 loss before considering the additional deduction.
Chapter14: Taxes On The Financial Statements
Section: Chapter Questions
Problem 31P
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Question
Company K operates in a jurisdiction that levies an income tax with the following rate structure:
| Percentage Rate | Bracket |
|---|---|
| 7% | Income from −0− to $75,000 |
| 10 | Income from $75,001 to $150,000 |
| 15 | Income in excess of $150,000 |
Company K incurs a $23,600 deductible expense.
Required:
- Compute the current year tax savings from the deduction assuming that Company K’s taxable income before considering the additional deduction is $69,200.
- Compute the current year tax savings from the deduction assuming that Company K’s taxable income before considering the additional deduction is $170,800.
- Compute the current year tax savings from the deduction assuming that Company K has a $5,100 loss before considering the additional deduction.
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