Missing information:
Corporate Income Tax Rates
Taxable Income Tax
< $50,000 15% of the taxable income
$50,000 - $75,000 $7,500 + 25% of taxable income over $50,000
$75,000 - $100,000 $13,750 + 34% of taxable income over $75,000
$100,000 - $335,000 $22,250 + 39% of taxable income over $100,000
$335,000 - $10 million $113,900 + 34% of taxable income over $335,000
$10 - $15 million $3,400,000 + 35% of taxable income over $10 million
$15 million - $18,333,333 $5,150,000 + 38% of taxable income over $15,000,000
Over $18,333,333 35% of the taxable income
Answer:
A. What is Riverbend’s deductible DRD assuming it owns 19 percent of Hobble Corporation?
- $247,500 x 70% = $173,250
B. Assuming the facts in part (a), what is Riverbend’s marginal tax rate on the dividend?
- taxable income = $74,250, marginal tax rate = 25%
C. What is Riverbend’s DRD assuming it owns 53 percent of Hobble Corporation?
- $247,500 x 80% = $198,000
D. Assuming the facts in part (c), what is Riverbend’s marginal tax rate on the dividend?
- taxable income = $49,250, marginal tax rate = 15%
E. What is Riverbend’s DRD assuming it owns 90 percent of Hobble Corporation (and is part of the same affiliated group)?
- $247,500 x 100% = $247,500
F. Assuming the facts in part (e), what is Riverbend’s marginal tax rate on the dividend?
- taxable income = $0, marginal tax rate = 0%
