Red, White, Blue & Orange have taxable income as follows: Corporation Taxable Income Red $99,000 White $330,000 Blue $900,0

Red, White, Blue & Orange have taxable income as follows:

Corporation Taxable Income

Red $99,000

White $330,000

Blue $900,000

Orange $40,000,000

A. Calculate the marginal tax rate for each corporation.

B. Calculate the effective tax rate for each corporation.

C. Explain why the marginal tax rate for a C Corporation can exceed 35% but the effective tax rate cannot.

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