|
|
"A" Corp.
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"B" Corp.
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"C" Corp.
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"D" Corp.
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"E" Corp.
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"F" Corp.
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"G" Corp.
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"H" Corp.
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Federal Marginal Income Tax Rate
Projected SBT Liability*
Amount of Contribution
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15%
$100,000
$10,000
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15%
$50,000
$10,000
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25%
$100,000
$10,000
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25%
$50,000
$10,000
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34%
$100,000
$10,000
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34%
$50,000
$10,000
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35%
$100,000
$10,000
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35%
$50,000
$10,000
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Impact on State Taxes:
Amount of contribution
x State Tax Credit
= State Tax Savings**
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$ 10,000
50%
$5,000
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$10,000
5% of SBT
$2,500
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$10,000
50%
$5,000
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$10,000
5% of SBT
$2,500
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$10,000
50%
$5,000
|
$10,000
5% of SBT
$2,500
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$10,000
50%
$5,000
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$10,000
5% of SBT
$2,500
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Impact on Federal Taxes:***
Amount of contribution
- SBT Reduction
= Net Change Fed. Tax. Inc.
x Marginal Tax Rate
= Federal Tax Savings
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$ 10,000
(5,000)
$5,000
15%
$750
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$10,000
(2,500)
$7,500
15%
$1,125
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$10,000
(5,000)
$5,000
25%
$1,250
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$10,000
(2,500)
$7,500
25%
$1,875
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$10,000
(5,000)
$5,000
34%
$1,700
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$10,000
(2,500)
$7,500
34%
$2,550
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$10,000
(5,000)
$5,000
35%
$1,950
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$10,000
(2,500)
$7,500
35%
$2,925
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Total Tax Savings:
State tax savings
+ Federal Tax Savings
= Total Tax Savings
|
$5,000
750
$5,750
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$2,500
1,125
$3,625
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$5,000
1,250
$6,250
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$2,500
1,875
$4,375
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$5,000
1,700
$6,700
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$2,500
2,550
5,050
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$5,000
1,950
$6,950
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$2,500
2,925
$5,425
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Actual Cost of Contribution:
Amount of contribution
- Total Tax Savings
= Donor's Actual Cost
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$ 10,000
(5,750)
$4,250
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$10,000
(3,625)
$6,375
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$10,000
(6,250)
$3,750
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$10,000
(4,375)
$5,625
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$10,000
(6,700)
$3,300
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$10,000
(5,050)
$4,950
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$10,000
(6,950)
$3,050
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$10,000
(5,425)
$4,575
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* SBT is the Michigan Single Business Tax.
** Tax credit is equal to the smallest of 50% of the amount contributed, 5% of net SBT tax liability, or $5,000.
*** Federal tax liability adjusted for decrease in SBT deduction.
S corporation
An S corporation is a pass through entity. This means the income and charitable contributions of the S corporation passes through to the individual shareholders and they each report their share of the income and charitable contributions on their Form 1040. Notwithstanding this fact, however, an S corporation (just like a C corporation) that must file the Michigan single business tax return may claim the Community Foundation tax credit.
This chart was prepared by Clark Hill PLC on behalf of the Council of Michigan Foundations.
The information is for illustrative purposes only. Please check with your tax advisor.
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