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Individuals and firms pay out a significant portion of their income as taxes, so taxes are important in both personal and corporate decisions. Our tax system is progrestives

Individual

Individuals pay taxes on wages, on investment income, and on the profits of proprietorships and partnerships. Taxable income is defined as gross income less a set of deductions. In $2018,$ the

personal exemption is for taxpayers and their dependents is zero. A capital gain $($loss$)$ is the profit $($loss$)$ from the sale of a capital asset for more $($less$)$ than its purchase price. In $2018,$ for

term capital gains is $20\%].$ Investment $(0)$ income consists of dividend and interest income. Interest income $($except interest on state and local government debt which is exempt from federal

taxes$)$ is taxed as ordinary income $-,$ while dividends are taxed at the same rate as long$-$term capital gains $0^0.$ Generally, interest payments are not tax deductible for individuals except for

interest on home mortgages $(-0$ within certain limits$.$ Projected $2018$ tax rate schedules are shown for single individuals and married couples filing jointly.

$2018$ Individual Tax Rates

Single Individuals

Standard deduction for individual: $$12,000$ Quantitative Problem: Andrews Corporation has income from operations of $$220,000.$ In addition, it received interest income of $$22,000$ and received dividend income of $$31,300$ from

another corporation. Finally, it paid $$12,400$ of interest income to its bondholders and paid $$45,700$ 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 dollar.

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