Answer:
a.
Total Taxable Income = $105,000
Tax of the year = $24,200
b.
Total Taxable Income = $65,000
Tax of the year = $11,250
Explanation:
a.
Given
Operating Income = $480,000
Operating Expenses = $390,000
Capital Gain = $55,000
Capital Loss = $40,000
From the above
Taxed Operating Income = Operating Income - Operating Expense
Taxed Operating Income = $480,000 - $390,000
Taxed Operating Income = $90,000
Capital Gain (Loss) = Capital Gain - Capital Loss
Capital Gain (Lossl = $55,000 - $40,000
Capital Gain (Loss) = $15,000
Total Taxable Income = Taxed Operating Income + Capital Gain (Loss)
Total Taxable Income = $90,000 + $15,000
Total Taxable Income = $105,000
Calculating Tax of the year...
For $0 to $50,000; the tax is $7,500
For $50,000 to $75,000; the tax is $6,250
For $75,000 to $100,000; the tax is $8,500
For $100,000 to $335,000; the tax is $1,950
Total Tax of the year = $7,500 + $6,250 + $8,509 + $1,950
Total = $24,200
b.
Given
Operating Income = $480,000
Operating Expenses = $390,000
Capital Gain = $15,000
Capital Loss = $40,000
From the above
Total Taxable Income = Operating Income - Operating Expense
Total Taxable Income = $480,000 - $390,000
Total Taxable Income = $90,000
Capital Gain (Loss) = Capital Gain - Capital Loss
Capital Gain (Lossl = $15,000 - $40,000
Capital Gain (Loss) = -$25,000
Total Taxable Income = Taxed Operating Income + Capital Gain (Loss)
Total Taxable Income = $90,000 - $25,000
Total Taxable Income = $65,000
Calculating Tax of the year...
For $0 to $50,000; the tax is $7,500
For $50,000 to $75,000; the tax is $3,750
Total Tax of the Year = $7,500 + $3,750
Total = $11,250
