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Average Tax Rate at Top of Bracket 10.0% If Your Taxable Income Is Up to $9,525 $9,525 - $38,700 $38,700 - $82,500 $82,500 - $157,500 $157,500 - $200,000 $200,000 - $500,000 Over $500,000 2018 Individual Tax Rates Single Individuals You Pay This Plus This Percentage Amount on the on the Excess over the Base of the Bracket Base (Marginal Rate) $0 10.0% 952.50 12.0 4,453.50 22.0 14,089.50 24.0 32,089.50 32.0 45,689.50 35.0 150,689.50 37.0 11.5 17.1 20.4 22.8 30.1 37.0 Standard deduction for individual: $12,000 Average Tax Rate at If Your Taxable Income Is Top of Bracket 10.0% Up to $19,050 $19,050 - $77,400 $77,400 - $165,000 $ 165,000 - $315,000 $315,000 - $400,000 $400,000 - $600,000 Over $600,000 Married couples Filing Joint Returns You Pay This Plus This Percentage Amount on the on the Excess over the Base of the Bracket Base (Marginal Rate) $0 10.0% 1,905.00 12.0 8,907.00 22.0 28,179.00 24.0 64,179.00 32.0 91,379.00 35.0 161,379.00 37.0 11.5 17.1 20.4 22.8 26.9 37.0 Standard deduction for married couples filing jointly: $24,000 Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $122,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $5,400. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent. $ Corporate Corporations earn most of their income from operations; however, they may also receive interest and dividend income. Interest y income is taxed as ordinary income; however, dividend vincome is taxed more favorably. 50% of dividends vreceived is excluded from taxable income, while the remaining 50% is taxed at the ordinary tax rate. For businesses, interest v payments are regarded as an expense so they are tax deductible; however, dividend v payments are not tax deductible. Consequently, our tax system encourages debt v financing over equity financing. Depreciation expense is tax deductible, so the larger the depreciation, the lower v the taxable income, the lower the taxes, and the higher v the firm's operating cash flow. V Quantitative Problem: Andrews Corporation has income from operations of $258,000. In addition, it received interest income of $25,800 and received dividend income of $31,400 from another corporation. Finally, it paid $10,200 of interest income to its bondholders and paid $44,600 of dividends to its common stockholders. The firm's federal tax rate is 21%. What is the firm's federal income tax? Do not round intermediate calculations. Round your answer to the nearest cent. $ Average Tax Rate at Top of Bracket 10.0% If Your Taxable Income Is Up to $9,525 $9,525 - $38,700 $38,700 - $82,500 $82,500 - $157,500 $157,500 - $200,000 $200,000 - $500,000 Over $500,000 2018 Individual Tax Rates Single Individuals You Pay This Plus This Percentage Amount on the on the Excess over the Base of the Bracket Base (Marginal Rate) $0 10.0% 952.50 12.0 4,453.50 22.0 14,089.50 24.0 32,089.50 32.0 45,689.50 35.0 150,689.50 37.0 11.5 17.1 20.4 22.8 30.1 37.0 Standard deduction for individual: $12,000 Average Tax Rate at If Your Taxable Income Is Top of Bracket 10.0% Up to $19,050 $19,050 - $77,400 $77,400 - $165,000 $ 165,000 - $315,000 $315,000 - $400,000 $400,000 - $600,000 Over $600,000 Married couples Filing Joint Returns You Pay This Plus This Percentage Amount on the on the Excess over the Base of the Bracket Base (Marginal Rate) $0 10.0% 1,905.00 12.0 8,907.00 22.0 28,179.00 24.0 64,179.00 32.0 91,379.00 35.0 161,379.00 37.0 11.5 17.1 20.4 22.8 26.9 37.0 Standard deduction for married couples filing jointly: $24,000 Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $122,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $5,400. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent. $ Corporate Corporations earn most of their income from operations; however, they may also receive interest and dividend income. Interest y income is taxed as ordinary income; however, dividend vincome is taxed more favorably. 50% of dividends vreceived is excluded from taxable income, while the remaining 50% is taxed at the ordinary tax rate. For businesses, interest v payments are regarded as an expense so they are tax deductible; however, dividend v payments are not tax deductible. Consequently, our tax system encourages debt v financing over equity financing. Depreciation expense is tax deductible, so the larger the depreciation, the lower v the taxable income, the lower the taxes, and the higher v the firm's operating cash flow. V Quantitative Problem: Andrews Corporation has income from operations of $258,000. In addition, it received interest income of $25,800 and received dividend income of $31,400 from another corporation. Finally, it paid $10,200 of interest income to its bondholders and paid $44,600 of dividends to its common stockholders. The firm's federal tax rate is 21%. What is the firm's federal income tax? Do not round intermediate calculations. Round your answer to the nearest cent. $

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