Determine the amount of foreign source income

Assignment Help Accounting Basics
Reference no: EM131873753

Problem - Eastwood Company ( A US based company) has subsidiaries in three countries, X, Y and Z. All three subsidiaries manufacture and sell products in their host country. Corporate income tax rates in these three countries over the most recent three years period as follows:

Country Year 1 Year 2 Year 3

X 50% 50% 40%

Y 25 25 25

Z 36 30 30

None of these countries imposes a withholding tax on dividends distributed to a foreign parent company. The US corporate income tax rate over this period was 35%.

Pretax income earned by each subsidiary and the percentage of after tax income paid to Eastwood over hte most recent three year period are as follows:

Year 1 Year 2 Year 3

Subsidiary X

Pretax Income $100,000 $100,000 $100,000

Dividend (% of after tax income) 100% 50% 50%

Subsidiary Y

Pretax income $150,000 $150,000 $150,000

Dividend (% of after tax income) 50% 50% 50%

Subsidiary Z

Pretax Income $200,000 $200,000 $200,000

Dividend (% of after tax income) 40% 40% 100%

Required:

A. Determine the amount of foreign source income Eastwood will include in the US tax return in each of the three years.

B. Determine the amount of foreign tax credit Eastwood will be allowed to take in determining its US tax liability in each of the three years.

C. Determine the amount of excess foreign tax credit, if any, Eastwood will have in each of the three years.

D. Determine Eastwood's net US tax liability in each of the three years.

Reference no: EM131873753

Questions Cloud

Discuss the reason why capital investment projects : Discuss the reason why capital investment projects should be evaluated for risk in the present, and how risk might be involved in future planning
What is the fair price of the stock : Assume that the expected return on the market is 8%, the risk-free rate is 4%, and the beta of the stock is 1.4. What is the fair price of the stock?
Explore the impact of the iom report on nursing education : Explore the impact of the IOM report on nursing education and the impact of the IOM report on the nurse's role as a leader.
Consumer confidence survey : One of the indices that economists use to gauge consumer expectations is the consumer confidence survey
Determine the amount of foreign source income : Determine the amount of foreign source income Eastwood will include in the US tax return in each of the three years
Prepare an outline for your personal philosophy of care : Prepare an outline for your Personal Philosophy of Care. Begin to build a thesis statement for your Personal Theoretical Framework for nursing.
Explain the two primary functions of bank capital : Explain the two primary functions of bank capital, and how bank capital might be differently perceived by regulators, depositors
What is diddy cost of equity : What is Diddy's cost of equity? (Round your answer to 2 decimal places.)
Explain the changing landscape of the us health care system : Explain the changing landscape of the US health care system through the ACA and specific initiatives that have been funded, enacted and currently implemented.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd