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Question: income tax rates corporations taxable income the tax is but...

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Income Tax Rates Corporations Taxable Income The Tax Is: But not Over Of the Amount Over- Over 50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333 $50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333 15% $ 7,500 + 25% 13,750 + 34% 22,250 + 39% 11 3,900 + 34% 3,400,000 + 35% 5,150,000 + 38% 3596 50,000 75,000 100,000 335,000 10,000,000 15,000,000Problem 1-10 (LO. 4, 5) Ashley runs a small business in Boulder, Colorado, that makes snow skis. She expects the business to grow substantially over the next three years. Because she is concerned about product liability and is planning to take the company public in year 2, she currently is considering incorporating the business. Pertinent financial data are as follows: Sales revenue Tax-free interest income Deductible cash expenses Tax depreciation Year 1 $150,000 5,000 30,000 25,000 Year 2 $320,000 8,000 58,000 20,000 Year 3 $600,000 15,000 95,000 40,000 Ashley expects her combined Federal and state marginal income tax rate to be 25% over the three years before any profits from the business are considered. Her after-tax cost of capital is 10%, and the related present value factors are: for 2017, 0.8929; for 2018, 0.7972; and for 2019, 0.7118 Click here to access the tax table to use for this problem Enter all amounts as positive numbers. When required, round your answers to the nearest dollar a. Considering only these data, compute the present value of the future cash flows for the three-year period, assuming that Ashley incorporates the business and pays all after-tax income as dividends (for Ashleys dividends that qualify for the 15% rate)Year 1 Year 2 Year 3 Taxable income 95,000 242,000 465,000 Corporate tax liability Cash available for dividends before taxes Less: corporate tax liability Equals: cash available for dividends after taxes Less: tax on dividend at 15% rate After-tax cash flow Present value of cash flow Feedback Check My Work Many of the provisions in the tax law deal with the relationships between owners and the business entities they own. Some corporations pay tax on corporate taxable income, while others pay no tax at the corporate levelb. Considering only these data, compute the present value of the future cash flows for the period, assuming that Ashley continues to operate the business as a sole proprietorship. Year 1 Year 2 Year 3 Taxable income 95,000 V 242,000 V 465,000 Individual tax liability Cash available for withdrawals before taxes Less: individual tax liability Equals: cash available for withdrawals after taxes Present value of cash flow

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