The interest expense of 100 arises from a notes payable

Reference no: EM13585705

USAco, a domestic corporation, is the wholly-owned U.S. subsidiary of FORco, a foreign corporation. The U.S.-Country F tax treaty exempts interest payments from withholding taxes. USAco%u2019s financial statements appear as follows:

BALANCE SHEET
Assets Liabilities & Owners%u2019 Equity
Cash $100
Receivables $500
Notes Payable $400
Owner%u2019s Equity $200
INCOME STATEMENT
Gross Income $500
Administrative Expenses $350
Interest Expense $100

The interest expense of $100 arises from a notes payable from USAco to FORco.What is the maximum amount of interest USAco may deduct on its U.S. return?

Reference no: EM13585705

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