Answer:
Taxable income = $240,000
Amount payable = $64,850
Explanation:
As per the data given in the question,
Taxable income :
Gross revenue = $400,000
Total cost = $100,000
Net profit = $400,000 - $100,000 = $300,000
Allowable tax deduction = $60,000
Taxable income = $300,000 - $60,000
= $240,000
Tax to be paid :
Computation of tax Amount to be taxed Rate Tax
$50,000 $50,000 15% $7,500
$50,000 to $75,000 $25,000 25% $6,250
$75,000 to $100,000 $25,000 34% $8,500
More than $100,000 $140,000 39% $54,600
Total tax $76,850
Amount payable = Total tax - Tax credit
= $76,850 - $12,000
=$64,850
