USCo purchases widgets in the United States and sells them abroad with title on resale passing in the foreign country whose operations sold the widget. In addition to earning $100,000 of taxable income from U.S. sales, USCo earns $100,000 of taxable income from Canadian sales by its Canadian branch that is subject to tax in Canada at a 25% rate. USCo also has a Hong Kong branch that earns $100,000 of taxable income that is subject to Hong Kong tax at a 15% rate. Any facts stated in an individual question relate solely to that question.
USCo purchases widgets in the United States and sells them abroad with title on resale passing in the foreign country whose operations sold the widget. In addition to earning $100,000 of taxable income from U.S. sales, USCo earns $100,000 of taxable income from Canadian sales by its Canadian branch that is subject to tax in Canada at a 25% rate. USCo also has a Hong Kong branch that earns $100,000 of taxable income that is subject to Hong Kong tax at a 15% rate. Any facts stated in an individual question relate solely to that question.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter16: Multijurisdictional Taxation
Section: Chapter Questions
Problem 18P
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) USCo purchases widgets in the United States and sells them abroad with title on resale passing in the foreign country whose operations sold the widget. In addition to earning $100,000 of taxable income from U.S. sales, USCo earns $100,000 of taxable income from Canadian sales by its Canadian branch that is subject to tax in Canada at a 25% rate. USCo also has a Hong Kong branch that earns $100,000 of taxable income that is subject to Hong Kong tax at a 15% rate. Any facts stated in an individual question relate solely to that question.
Q. If the $100,000 of taxable income earned by the Hong Kong branch constitutes interest income from various Hong Kong banks on which the Hong Kong branch incurs withholding tax at a rate of 15%, what is USCo's foreign tax credit?
(a) $0.
(b) $40,000.
(c) $36,000.
(d) $42,000.
(e) $15,000 in the branch limitation category and $21,000 in the passive limitation category.
Q. If USCo manufactures the widgets sold by the two foreign branches, what is USCo's foreign tax credit?
(a) $0.
(b) $21,000.
(c) $42,000.
(d) $40,000.
(e) $25,000.
Q. USCo, a C corporation, owns 100% of FORco, a foreign corporation. FORco earns $10 million of foreign-source income, pays $1 million of foreign income taxes, and distributes its $9 million in profits to USCo as a dividend. What is the amount of income tax in the United States?
(a) $0.
(b) $10 million.
(c) $1 million.
(d) $2.1 million.
(e) $9 million.
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