Question

In 2016, Saratoga Company had the following financial data: Operating income $320,000 Interest received $50,000 Interest paid $90,000 Dividend received $100,000 Dividend paid $150,000 Dividend of $100,000 was received from Findlay Inc. which is one of the companies that Saratoga company invest. As of the end of 2016, Saratoga Company owns 35% of Findlay, Inc.

Answer 1

In 2016, Saratoga Company had the following financial data: Operating income $320,000 Interest received $50,000 Interest paid $90,000 Dividend received $100,000 Dividend paid $150,000 Dividend of $100,000 was received from Findlay Inc. which is one of the companies that Saratoga company invest. As of the end of 2016, Saratoga Company owns 35% of Findlay, Inc.

Using the corporate tax rate table given below, what was the company’s tax Liability (just federal corporate income tax) for the year 2008?

335,000 - 10,000,000 34% 113,900 + .34x(inc>335,000)

Answer:

$78,200

Explanation:

From the given information:

Operating income = $320,000

Interest received = $50,000

Interest paid = $90000

Dividend received = $100000

Dividend paid        = $150,000

Therefore:

Saratoga Company Total Income = Operating income + Interest Received + Dividend Received  - Interest Paid - Dividend paid

Saratoga Company Total Income = $320,000 + $50,000 + $100,000 - $90,000 - $ 150,000

Saratoga Company Total Income = $470000 - $ 240000

Saratoga Company Total Income =  $230,000

According to the table given ;

The table tax percentage = 34 %

= $230,000  × 0.34

= $78,200