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1. Snowball, Inc., a U.S. corporation, operates an unincorporated branch manufacturing operation in Australia. On its U.S. tax return. Snowball,

This question was answered on May 08, 2010. View the Answer
U.S. Corporation operates an unincorporated branch manufactring operationin Australia. On its us tax return the corporation reports $450,000 of taxable income from Australia branch and $650,000 of taxable income from its US Branch. The company paid $135,000 in direct foreign taxable income. This $135,000 is a direct Foreign Tax Credit, because the company directly paid the foreign tax, What is the company's US tax liability after the foreign tax credit?
1. Snowball, Inc., a U.S. corporation, operates an unincorporated branch manufacturing operation in Australia. On its U.S. tax return. Snowball, Inc., reports $450,000 of taxable income from the Australian branch and $650,000 of taxable income from its U.S. operations. Snowball paid $135,000 in Australian income taxes related to the $450,000 in branch income. This $135,000 is a direct FTC because Snowball directly paid the foreign tax. What is snowball’s U.S. Tax liability after the FTC? 2. Weather, Inc., a domestic corporation, operates in both Mexico and the United States. This year, the business generated taxable income of $600,000 from foreign sources and $800,000 from U.S. sources. All of Weather's foreign-source income is in the general limitation basket. Weather's total worldwide taxable income is $1.4 million. Weather pays Mexican taxes of $228,000. Assume a 34% U.S. income tax rate What is Weather's FTC for the tax year? 3. McDonald Enterprises, a domestic corporation, owns 100% of OK, Ltd., an Irish corporation. OK's gross income for the year is $10 million. Determine OK's Subpart F income (before any expenses) from the transactions that it reported this year. a. OK received $600,000 from sales of products purchased from McDonald and sold to customers outside Ireland. b. OK received $1 million from sales of products purchased from McDonald and sold to customers in Ireland. c. OK received $400,000 from sales of products purchased from unrelated suppliers and sold to customers in Germany. d. OK purchased raw materials from McDonald, used these materials to manufacture finished goods, and sold these goods to customers in Italy. OK earned $200,000 from these sales. e. OK received $120,000 for the performance of warranty services on behalf of McDonald. These services were performed in Japan for customers located in Japan. f. OK received $60,000 in dividend income from investments in Canada and Mexico.
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This question was asked on May 08, 2010 and answered on May 08, 2010.

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