Asked by Maryana Bilska on Jul 06, 2024
Verified
Bentley Inc. received $31,000 in dividends over the past year. If 80% are excluded from taxation and assuming a flat tax rate of 35%, what is Bentley's tax liability?
A) $0
B) $2,170
C) $8,680
D) $6,200
Tax Liability
The total amount of tax owed to the tax authorities by an individual, organization, or corporation in a given period.
Excluded From Taxation
Income, transactions, or entities that are not subject to tax by law or specific tax policy.
Flat Tax Rate
A tax system with a constant rate, meaning the percentage taxed remains the same regardless of the amount of the taxable base.
- Calculate tax liabilities based on dividends received and tax laws.
Verified Answer
MM
Michael MurrayJul 09, 2024
Final Answer :
B
Explanation :
First, we need to determine how much of the dividends are taxable. 80% of $31,000 is $24,800, which means $6,200 is taxable. Applying a flat tax rate of 35%, Bentley's tax liability would be $2,170.
Learning Objectives
- Calculate tax liabilities based on dividends received and tax laws.