Answer:
$6450
Explanation:
Given that
Monthly gross income = 3500
Monthly operating expenses = 1100
Tax rate = 25%
Annual cost recovery expenses = 3000
Recall that, taxable income is income less expenses.
Therefore,
Annual gross income = 3500 × 12
= 42000
Annual operating expense = 1100 × 12
= 13200
Thus,
Taxable income = 42000 - 13200 - 3000
= 25800
Tax liability = tax rate × taxable income
= 0.25 × 25800
= $6450
Answer:
$6450
Explanation:
We have the following as the expenses
We have the annual cost recovery as = $3000
We have the monthly gross income as = $3500
We have monthly operating expenses as = $1100
And also, the tax rate is given as = 25%
If we can remember, taxable income is incomeless expenses.
With that, we are going to have
Annual gross income multiply by 12 since it annually = $3500 × 12
= $42000
Annual operating expense multiply by 12 since it is annually = $1100 × 12
= $13200
There our taxable income will be
Taxable income = $42000 - $13200 - 3000
= $25800
The tax liability will given as
Tax liability = tax rate × taxable income
Tax liability = 0.25 × 25800
Tax liability = $6450 which is the answer
