Engco a domestic corporation produces industrial engines at

Reference no: EM13583247

Engco, a domestic corporation, produces industrial engines at its U.S. plant for sale in the United States and Canada. Engco also has a plant in Canada that performs the final stages of production with respect to the engines sold in Canada. All of the output of the Canadian plant is sold in Canada, whereas only one-third of the output of the U.S. plant is shipped to Canada. The Canadian operation is classifi ed as a branch for U.S. tax purposes. During the current year, Engco%u2019s total sales to Canadian customers were $10 million, and the related cost of goods sold is $7 million. The average value of property, plant, and equipment is $30 million at the U.S. plant, and $5 million at the Canadian plant. Engco sells all goods with title passing at the Canadian plant in the case of Canadian sales and at the U.S. plant in the case of U.S. sales.

How much of Engco%u2019s export gross profi t of $3 million is classified as foreign source for U.S. tax purposes?

Now assume that the facts are the same as in part, except that the Canadian factory is structured as a wholly- owned Canadian subsidiary, rather than a branch. Engo%u2019s sales of semi-finished engines to the Canadian subsidiary were $6 million during the year and the related cost of goods sold was $4 million. The Canadian subsidiary%u2019s total sales of finished engines to Canadian customers was $10 million and the related cost of goods sold is $7 million.The average value of property, plant and equipment is still $30 million at the U.S. plant, and $5 million at the Canadian plant, and Engco sells all goods with title passing at its U.S. plant. How much of Engco%u2019s export gross profit of $2 million is classified as foreign source for U.S. tax purposes?How would your answer change if Engco sold its goods with title passing at the customer%u2019s location?

Reference no: EM13583247

Questions Cloud

When the data have the properties of ordinal data and the : q1. which of the following is an example of quantitative data? the players number on a baseball uniform the serial

Pursco is a domestic corporation that distributes : pursco is a domestic corporation that distributes scientific equipment worldwide. during the current year pursco had

Clculate the degree of operating leverage at sales of : kindle inc. manufactures cosmetic products that are sold through a network of sales agents. the agents are paid a

Assume that a taxpayer can choose when he is to receive : assume that a taxpayer can choose when he is to receive 10000 of fully taxable income. if the taxpayer receives the

Engco a domestic corporation produces industrial engines at : engco a domestic corporation produces industrial engines at its u.s. plant for sale in the united states and canada.

You have been invited by the audit partner on the pinnacle : in parts i pp.245-247 and ii pp. 287-288 of this case you performed preliminary analytical procedures and assessed

Using the labor time standard of 05 labor hour per unit : using the labor time standard of 0.5 labor hour per unit and a labor cost standard of 10 per labor hour for a 10 pound

If an institution concludes that an individual loan : if an institution concludes that an individual loan specifically identified for evaluation is not impaired under fas

Wat role has class race and gender played in their lives : interview two different individuals regarding their positions in society. analyze their responses regarding1.identify

User Account

All Pages