Bonus computations;

              Bulletin HASKINS & SELLS 31
Bonus Computations
WE are able through the courtesy of
Mr. L. L . Perrine, Assistant Treas­urer
of the American International Corpo­ration,
to present herewith a formula, or
rather a series of same, covering tax situa­tions
wherein there are involved normal in­come,
war income, and war excess profits
taxes and a bonus based on net income.
The essential portion of Mr. Perrine's
letter relating to this matter follows:
"I am setting forth in this letter
formulae for determining the amount
of bonus computed on a percentage ap­plied
against net income. Without go­ing
into more elaborate explanation, I
think the following will clearly show
the nature of the problem:
Let a = Net income prior to deduc­tion
of (1) Bonus; (2) War
Excess Profits Taxes; and
(3) War Income and Income
Taxes.
b = War Excess Profits Taxes,
computed as if there were no
bonus.
c = War Income and Income
Taxes, computed as if there
were no bonus.
d = Percentage of net income
(after deducting bonus itself
and all taxes) which repre­sents
bonus.
x = Net income after deducting
bonus and all taxes.
If I understand your problem cor­rectly,
the first four quantities, a, b, c,
and d, are known quantities for each