Compute the current-year income tax liability for each of the following unrelated calendar year corporations

Accounting Jan 13, 2021

Compute the current-year income tax liability for each of the following unrelated calendar year corporations. a. Darter Corporation has taxable income of $61,900. b. Owl Corporation has taxable income of $12,460,000. c. Toucan Corporation, a personal service corporation, has taxable income of $1,965,000.

Expert Solution

Answer :

In year 2018, the "Tax Reforms" has eliminated the various tax brackets for C corporations and imposed instead a flat tax rate of 21% tax on C corporations taxable income.

In the problem :

a. Tax Liability on Darter Corporation has taxable income of $61,900= $12,999 (ie. 61,900 * 21%)

b. Owl Corporation has taxable income of $12,460,000 = $2,616,600 (ie. 12,460,000 * 21%)

c. On Toucan Corporation, a personal service corporation, has taxable income of $1,965,000 = $ 412,650(ie. 1,965,000*21%)

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