What the withholding tax is

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Problem 1: FORco, a country F corporation, declares a $100 dividend to USAco, its U.S. parent corporation. Pursuant to the law of F, FORco withholds $10 of withholding tax and pays the remaining $90 to USAco. Because of the withholding tax, USAco is not liable for any additional country F's income taxes on the dividend. The $10 of withholding tax is:

Option (a) creditable because the tax passes the net income requirement.

Option (b) not creditable because the tax does not pass the net income requirement.

Option (c) creditable as an in-lieu-of tax.

Option (d) not creditable as an in-lieu-of tax.

Reference no: EM132476526

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