Eccentricity, Incorporated had $300,000 in 2018 taxable income. Using the tax schedule from Table 2.3, what are the company's 2018 income taxes, average tax rate, and marginal tax rate, respectively? Taxable incomePay this amount on Base incomePlus this percentage on anything over the base$0 – $50,000$ 015%$50,001 – $75,000$ 7,50025%$75,001 – $100,000$ 13,75034%$100,001 – $335,000$ 22,25039%$335,000 – $10,000,000$ 113,90034%

Answered: Eccentricity, Incorporated had $300,000…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section2.A: Taxes

Problem 3P

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Eccentricity, Incorporated had $300,000 in 2018 taxable income. Using the tax schedule from Table 2.3, what are the company's 2018 income taxes, average tax rate, and marginal tax rate, respectively?

Taxable income	Pay this amount on Base income	Plus this percentage on anything over the base
$0 – $50,000	$ 0	15%
$50,001 – $75,000	$ 7,500	25%
$75,001 – $100,000	$ 13,750	34%
$100,001 – $335,000	$ 22,250	39%
$335,000 – $10,000,000	$ 113,900	34%

Expert Solution

Step 1

Eccentricity taxable Income = $300,000

Total Income tax = 22,250 + ( 300,000 - 100,000)*39% = $ 100,250

Average tax paid = $ 100,250 / $ 300,000 * 100 = 33.42 %

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