Thomsonetics, Inc., a rapidly growing early-stage technology company, had the pretax income noted below for calendar years 2007–2009. The firm was subject to corporate taxes consistent with the rates shown in Table 2.6.

a. Calculate Thomsonetics’ tax liability for each year 2007, 2008, and 2009.

b. What was the firm’s average tax rate in each year?

c. What was the firm’s marginal tax rate in each year?

d. If in addition to its ordinary pretax income, Thomsonetics realized a capital gain of $80,000 during calendar year 2008, what effect would this have on its tax liability, average tax rate, and marginal tax rate in 2008?

e. Which tax rate—average or marginal—should Thomsonetics use in decision making? Why?