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# Answer to Question #55445 in Accounting for howard bonds

Question #55445
A company wants to setup a new office in a country where the corporate tax rate is as follows: 15% of first \$50,000 profits, 25% of next \$25,000, 34% of next \$25,000, and 39% of everything over \$100,000. Executives estimate that they will have gross revenues of \$500,000, total costs of \$300,000, \$30,000 in allowable tax deductions, and a one-time business start-up credit of \$8000. What is taxable income for the first year, and how much should the company expect to pay in taxes?
1
2015-10-12T09:20:24-0400
Taxable income for the first year will be: TI = 500,000 - 300,000 - 30,000 - 8,000 = \$162,000. The company should expect to pay in taxes 15% of first \$50,000 profits, 25% of next \$25,000, 34% of next \$25,000, and 39% of everything over \$100,000, so it will pay T = 0.15*50,000 + 0.25*25,000 + 0.34*25,000 + 0.39*62,000 = \$46,430.

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