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Problems Armenia

This document presents several issues related to corporate taxes. It calculates the average and marginal tax rates for different levels of pre-tax income. It also analyzes the difference between taxes on interest income versus dividends, and interest expenses versus dividends. Finally, it calculates capital gains taxes for the sale of assets.

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7 views7 pages

Problems Armenia

This document presents several issues related to corporate taxes. It calculates the average and marginal tax rates for different levels of pre-tax income. It also analyzes the difference between taxes on interest income versus dividends, and interest expenses versus dividends. Finally, it calculates capital gains taxes for the sale of assets.

Uploaded by

ScribdTranslations
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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P2.1 Corporate Taxes Tantor Supply, Inc.

is a small
corporation that operates as the exclusive distributor of a
important line of sports articles. During 2010, the company
won $92,500 before taxes.
a) Calculate the fiscal responsibility of the company using the
corporate tax rates program presented in the table
2.1.
13750 + [34% (92500 - 75000)] = 19700
b) What is the amount of profits after taxes of
Tantor Supply corresponding to 2010?
92500-19700=72800
c) What was the average tax rate of the company according to the
results obtained in section a)?
19700/92500=21.3%
d) What is the marginal tax rate of the company according to the
results obtained in section a)?
34%

P2.2 Average corporate tax rates Use the program of


corporate tax rates presented in table 2.1 and carry out
the following:
a) Calculate the tax liability, the profits after
taxes and the average tax rates of the following
corporate profit levels before taxes:
$10,000; $80,000; $300,000; $500,000; $1.5 millones; $10
millions; and $20 million.
Utilities before taxes
Fiscal Responsibility
Utilities after tax.
Average tax rates (%)
10000
1500
8500
15
80000
15450
64550
19.31
300000
100250
199750
33.42
500000
170000
330000
34
1,500,000
510000
990000
34
10000000
3400000
6600000
34
20000000
7050000
12,950,000
35.25

b) Graph the average tax rates (measured along the axis


of the y) and the income levels before taxes (measured
about the x-axis). What generalization can be made about
of the relationship between these variables?

P2.3 Marginal corporate tax rates Use the program


of corporate tax rates presented in table 2.1 and
do the following:
a) Calculate the marginal tax rate for the following levels of
ganancias corporativas antes de impuestos: $15,000; $60,000;
$90,000; $200,000; $400,000; $1 millón; y $20 millones.

Earnings before taxes


Marginal tax rate (%)
15000
15
60000
25
90000
34
200000
39
400000
34
1000000
34
20000000
38

b) Graph the marginal tax rates (measured on the axis


of the y) and the levels of income before taxes (measured
about the x-axis). Explain the relationship between these variables.

P2.4 Interest income versus dividend income


During the past year, Shering Distributors, Inc. made profits.
before taxes derived from their operations for an amount of
$490,000. In addition, during the year he received $20,000 in income from
interest on bonds held in Zig Manufacturing, and received
$20,000 in dividend income from your 5% of shares
commonalities I had at Tank Industries, Inc. The company Shering
is at the fiscal level of 40% and is a candidate for an exemption for
dividends of 70% on shares held in Tank
Industries.
a) Calculate the company's tax only on its profits
operational.
113900 + (34% x (490000 - 335000)) = 166600
b) Calculate the tax and the amount after tax derived
from the income generated by interest from the bonds held in
Zig Manufacturing.
15%(20000)=3000
Amount after taxes------17000
c) Calculate the tax and the amount after taxes derived
from the income from dividends derived from the shares
maintained at Tank Industries, Inc.
Dividends are not tax-deductible, therefore they do not
Amount after tax is equal to the dividend, which is 20000.
d) Compare, contrast, and analyze the amounts after taxes
that result from the income from interest and dividends calculated
in sections b) and c).
amount after tax (interest)------- 17000
monto después de impuesto(dividendos)----- 20000
Here we observe that the amount after taxes for
interest decreases the amount before taxes while
that dividends do not affect the amount after taxes.
e) What is the total fiscal responsibility of the company during the
year?
Fiscal responsibility = tax by operation + tax by
interests
166600 + 3000 = 169600
P.2.5 Interest expenses versus dividend expenses. Michaels
Corporation expects its earnings before interest and
taxes amount to $40,000 during this period. Considering a
ordinary tax rate of 40%, calculate the profits after
company taxes and available profits for the
common shareholders (profits after taxes plus
preferred stock dividends, if they exist, in the
following conditions:
The company pays $10,000 in interest.
40000-10000 expenses in interest
30000 profits before taxes
12000 taxes 40%
18000 profits after taxes
Earnings available for common shareholders - 10000
b) The company pays $10,000 in stock dividends
preferred.
40000 profit before tax
40% taxes
16000
24000 profit after taxes
Earnings available for shareholders
common=24000+10000=34000
P2.6 Capital Gains Taxes Perkins Manufacturing
consider the sale of two non-depreciable assets, X and Y. The asset
X was acquired for $2,000 and is currently being sold for $2,250.
asset was acquired for $30,000 and is currently being sold for
$35,000. The company is subject to a tax rate of 40%
about capital gains.

a) Calculate the amount of capital gain, if there is any,


obtained by each of the assets.

Active
Acquisition price
Sale price
Profit
X
2000
2250
250
Y
30000
35000
5000
b) Calculate the tax rate on the sale of each asset.
The company is subject to a tax rate of 40% on its
gains therefore we can also say that the tax rate
the sale of each asset is 40%

P2.7 Capital Gains Tax The following table


it contains the purchase and sale prices of non-capital assets
depreciable assets of an important corporation. The company paid the
40% capital gains tax.

Purchase Price
$ 3,000 $ 3,400
B 12,000 12,000
C 62,000 80,000
D 41,000 45,000
E 16,500 18,000

a) Determine the amount of capital gain obtained from each


one of the five assets.
b) Calculate the amount of tax paid on each of the
assets.

Asset
A 400 160
B00
C 18000 7200
D 4000 1600
E 1500 600
P2.8 ETHICAL PROBLEM The Securities Exchange Act of 1934
limits, but does not prohibit, executives from trading shares of their
own company. What ethical problems could arise when a
executive with insider information wishes to buy or sell
shares of the company where you work?

The executive can buy more shares because he knows a lot


about the condition of the company, this would be for interests and would bring
discord with the other workers since I would be buying
for convenience and if you wish to sell it is to avoid losing your money,
In other words, so the company sinks but he does not.

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