Answered: . tax rate is 35%. What are the funds…

. tax rate is 35%. What are the funds available to the parent MNC if no tax credits are allowed? A) $624,752 B) $425,250 C) $406,088

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter25: Taxation Of International Transact Ions

Section: Chapter Questions

Problem 23P

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Question

3. Hanson Mills,, a U.S.-based MNC has a foreign subsidiary that earns $1,050,000 before local taxes, with all the after tax funds to be available to the parent in the form of dividends. The foreign income tax rate is 30%, the foreign dividend withholding tax rate is 15% and the firm's U.S. tax rate is 35%. What are the funds available to the parent MNC if no tax credits are allowed?

A) $624,752

B) $425,250

C) $406,088

D) $735,000

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Hanson Mills, a U.S.-based MNC has a foreign subsidiary that earns $1,050,000 before local taxes, with all the after tax funds available to the parent in the form of dividends. The foreign income tax rate is 30 percent, the foreign dividend withholding tax rate is 15 percent, and the firm's U.S. tax rate is 35 percent. What are the funds available to the parent MNC if foreign taxes can be applied as a credit against the MNC's U.S. tax liability? A) $624,750 B) $425,250 C) $257,250 D) $735,000
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