How much is the excess tax credit

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Reference no: EM131072113

Suppose that a 100% payout subsidiary operates in a foreign country with a corporate tax rate of 42% and a withholding tax on dividends of 5%. If the subsidiary has generated a taxable income of $10,000 in the foreign country, and the US corporate tax rate is 34%, how much is the excess tax credit if the dividends are repatriated back to the US? Show all calculations.

a.12.9%

b. 32.5%

c. 10.9%

d. 30.5%

Reference no: EM131072113

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