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I need help with these questions number 4 ,4aand510977475


rate .
4. Lincoln USA owns 100% Smith Inc., a Canadian corporation. In order to expand its operations in
Canada, Lincoln needed to borrow $10 million from Chase Bank. Chase agreed to make the loan on the
or cash
condition that Smith guarantee the loan. What are the tax consequences of the above loan?
4a. What advice would you provide if instead of Lincoln owning Smith, Joan Davis, a US person owned
Lincoln? (Hint. The answer is provided in a footnote in this chapter)
Section 965 imposes a transition tax
foreign subsidiaries of U.S. compan
triated. A mandatory tax of 15.5
5. Assume the same facts in 4 above. Lincoln earned $10 million of Subpart F income from Smith, it paid
$1 million in Canadian taxes and never paid a dividend. Will Lincoln be eligible for any foreign tax
credits? Explain your answer.
On for be peys on we put Inke
all income,
On 3
6. USA, Inc., a US corporation, produced widgets at its Texas plant and sells them to customers located
the UK. (1) Will the widgets be considered US source income or foreign source income? (2) Will your
ts were manufactured in China? Explain your answer.

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