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1. Lintner Beverage Corp. reported the following information from their financial statements:
| Operating income (EBIT) = | $10,500,000 |
| Interest payments on long-term debt = | $1,750,000 |
| Dividend income = | $1,000,000 |
Calculate Lintner's total tax liability using the corporate tax schedule below:
| Taxable Income | Tax on Base of Bracket | Percentage on Excess above Base |
| $0-$50,000 | $0 | 15% |
| $50,000-$75,000 | 7,500 | 25 |
| $75,000-$100,000 | 13,750 | 34 |
| $100,000-$335,000 | 22,250 | 39 |
| $335,000-$10,000,000 | 113,900 | 34 |
| $10,000,000-$15,000,000 | 3,400,000 | 35 |
| $15,000,000-$18,333,333 | 5,150,000 | 38 |
| Over $18,333,333 | 6,416,667 | 35 |
Assume a 70% dividend exclusion for tax on dividends.
Select one:
a.$2,892,380
b.$3,692,400
c.$3,292,390
d.$2,738,530
e.$3,077,000
Answer & Explanation
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