Red, White, Blue, and Orange have taxable income as follows: Corporation Taxable Income Red .. $ 99,000

Question:

Red, White, Blue, and Orange have taxable income as follows:

Corporation Taxable Income

Red ………………………….. $ 99,000

White ………………………… 330,000

Blue ………………………….. 900,000

Orange ………………………. 40,000,000

a. Calculate the marginal tax rate and the effective tax rate for each of the C corporations.

b. Explain why the marginal tax rate for a C corporation can exceed 35% but the effective tax rate cannot.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...