Cracker Corporation's First-Quarter 2019, Pretax Income Is $55,000 Required:
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Calculate the First and Second Quarter Interim Tax

question 48

Essay

Cracker Corporation's first-quarter 2019, pretax income is $55,000.The company anticipates an annual tax credit of $15,500.Cracker is projecting income for the remaining three quarters of $135,000.For the second quarter of 2019, Cracker reports $85,000 of pretax income with a projected pre-tax income for the remainder of the year of $165,000.Cracker does not have any permanent differences between taxable income and financial income.
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In the second quarter, Cracker suffers an uninsured loss of one of its warehouses.The loss is determined to be unusual in nature and infrequent in occurrence.The amount of the loss is determined to be $140,000.
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The current tax schedule is:
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$$\begin{array} { l l } \$ 1 - \$ 100,000 & 15 \% \\\$ 100,001 - 200,000 & 22 \% \\\$ 200,001 - 460,000 & 28 \% \\\$ 460,001 \text { and above } & 30 \%\end{array}$$ Required:
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Calculate the first and second quarter interim tax expenses on continuing income and on the non-ordinary item.
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Definitions:

Federal Taxes

Taxes imposed by the federal government on income, property, and consumption to fund national programs and services.

Gross Income

The total earnings received before any deductions such as taxes, benefits, and expenses.

Taxable Income

The portion of an individual's or entity's income that is subject to taxation by governing authorities.

Tax Table

A chart provided by tax authorities that displays the amount of tax due based on income levels, used to determine tax liabilities.