Question

Trish Foods, Inc. had pretax ordinary corporate income during 2009 of $2.7 million. In addition during the year, Trish sold a group of non-depreciable business assets (in the 5-year depreciation class) that it had purchased new for $980,000 three years earlier. Because the assets were not depreciable, their book value at the time of sale was also $980,000. The firm pays corporate income taxes at the rates shown in text Table.
a. Calculate Trish’s 2009 tax liability, average tax rate, and marginal tax rate, assuming the group of assets was sold for $1,150,000
b. Calculate Trish’s 2009 tax liability, average tax rate, and marginal tax rate, assuming the group of assets was sold for $890,000.
c. Compare, contrast, and discuss your findings in parts a.) and b.).


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  • CreatedMay 13, 2015
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