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Assignment 1: Calculating Tax Cost

Microtech Software Corporation (MSC) was founded in 2001. The founder, Chan Li, studied at MIT and worked for a large software corporation before returning to his hometown, Centervale, to set up his own company.

The corporate tax rate structure applicable in Centervale is as follows:

Taxable Income	Tax Rate
Up to $50,000	15 percent
From $50,001 through $150,000	22 percent
Income in excess of $150,000	30 percent

MSC has an opportunity to invest in a project that is expected to generate an additional $55,000 of taxable income.

Compute the tax cost of this additional income for the following three scenarios:

MSC's taxable income before the additional income is $45,000.
MSC's taxable income before the additional income is $300,000.
MSC has a loss of $5,000 before considering the additional income.

Show all the steps of the calculation and the final answer for each scenario. Compare the results for the three scenarios and comment on any differences.

Write a one page paper in MS Word format. Apply APA standards.

By September 13, 2014 deliver your assignment to the M1: Assignment 1 Dropbox.

Assignment 1 Grading Criteria	Maximum Points
Steps of the calculation demonstrated correct reasoning and quantities were accurately calculated.	40
Tax implications of the three scenarios were adequately analyzed and valid conclusions were drawn.	50
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.	10
Total:	100