Case 11-1
US International Corporation
US International Corporation, a US taxpayer, has investments inForeign Entities A-G. Relevant information for these entities forthe current fiscal year appears in the following table:
Entity Country % owned Activity Pretax income (millions) Income tax rate Dividend withholding tax rate Net amount received by parent(millions) USIC United States 0% MFG $10 35% - - A Argentina 100% MFG $1 35% 0% 200,000 B Brazil 100% MFG $2 34% 0% 2,500,000 C Canada 100% MFG $3 26% 5% 1,000,000 D Hong Kong 100% Investment $2 16.50% 0% 1,500,000 E Liechtenstein 100% Distribution $3 10% 4% - F Japan 51% MFG $2 38% 5% 500,000 G New Zealand 60% Banking $4 28% 5% 1,000,000
Additional info
1.) USIC $10M income before tax derived from production and saleof products in the US
2.) Each entity is legally incorporated in the its host countryother than A, which is registered with Argentinian gov't as abranch
3.) Entities A, B, C, and F produce and market products in theirhome countries
4.) Entity D makes passive investement sin stocks and bonds inthe Hong Kong financial markets. Income is derived
solely from dividends and interest
5.) Entity E markets goods purchased from (mfg'd by) USIC. OfE's sales, 95% are made in Austria, Germany, and Switzerland, and5% are made in Liechtenstein
6.) Entity G operates in the financial services industry in NewZealand
Determine the following:
a.) The amount fo US taxable income for each Entity A - G
b.) The foregin tax credit allowed in the US, first by basketand then in total
c.) The net US tax liability
d.) Any excess foreign tax credits (identify by basket)
In response to your comment: Taxation is a subset ofaccounting. Taxation is also not a topic selection.
Case 11-1
US International Corporation
US International Corporation, a US taxpayer, has investments inForeign Entities A-G. Relevant information for these entities forthe current fiscal year appears in the following table:
| Entity | Country | % owned | Activity | Pretax income (millions) | Income tax rate | Dividend withholding tax rate | Net amount received by parent(millions) |
| USIC | United States | 0% | MFG | $10 | 35% | - | - |
| A | Argentina | 100% | MFG | $1 | 35% | 0% | 200,000 |
| B | Brazil | 100% | MFG | $2 | 34% | 0% | 2,500,000 |
| C | Canada | 100% | MFG | $3 | 26% | 5% | 1,000,000 |
| D | Hong Kong | 100% | Investment | $2 | 16.50% | 0% | 1,500,000 |
| E | Liechtenstein | 100% | Distribution | $3 | 10% | 4% | - |
| F | Japan | 51% | MFG | $2 | 38% | 5% | 500,000 |
| G | New Zealand | 60% | Banking | $4 | 28% | 5% | 1,000,000 |
Additional info
1.) USIC $10M income before tax derived from production and saleof products in the US
2.) Each entity is legally incorporated in the its host countryother than A, which is registered with Argentinian gov't as abranch
3.) Entities A, B, C, and F produce and market products in theirhome countries
4.) Entity D makes passive investement sin stocks and bonds inthe Hong Kong financial markets. Income is derived
solely from dividends and interest
5.) Entity E markets goods purchased from (mfg'd by) USIC. OfE's sales, 95% are made in Austria, Germany, and Switzerland, and5% are made in Liechtenstein
6.) Entity G operates in the financial services industry in NewZealand
Determine the following:
a.) The amount fo US taxable income for each Entity A - G
b.) The foregin tax credit allowed in the US, first by basketand then in total
c.) The net US tax liability
d.) Any excess foreign tax credits (identify by basket)
In response to your comment: Taxation is a subset ofaccounting. Taxation is also not a topic selection.
