Question

Orleans Corporation, a U.S. corporation, reported U.S. taxable income of $2,000,000. Included in the computation of...

Orleans Corporation, a U.S. corporation, reported U.S. taxable income of $2,000,000. Included in the computation of taxable income was a $400,000 dividend from a 5%-owned Canadian subsidiary. A withholding tax of $8,000 was imposed on the dividend. What is Orleans’s net U.S. tax liability?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When an American Company buys stocks or bonds from foriegn based companies , any investment income (interest, dividend) are subject to US income tax and taxes levied by the the company home country. However the US tax code offers "foreign tax credit" . The amount of foreign tax one can claim as credit is based on how much you be taxed on the same proceeds under US tax law.

In this case Orleans Corporation a US corp will be taxed on income of $2,000,000 which includes a taxable income of $400,000 as dividend from 5% owned Canadian subsidiary however will be allowed to claim tax credit of $ 8,000 (withholding tax) thus reducing the actual tax due.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Horton Corporation is a 100 percent owned Canadian subsidiary of Cruller Corporation, a U.S. corporation. Horton...
Horton Corporation is a 100 percent owned Canadian subsidiary of Cruller Corporation, a U.S. corporation. Horton had post-1986 earnings and profits of C$2,400,000 and post-1986 foreign taxes of $1,600,000. During the current year, Horton paid a dividend of C$600,000 to Cruller. The dividend was characterized as general category income for FTC purposes. The dividend was subject to a withholding tax of C$30,000. Assume an exchange rate of C$1 = $1. Cruller reported U.S. sourced taxable income of $2,000,000 before considering...
Ypsi Corporation has a precredit U.S. tax of $420,000 on $2,000,000 of taxable income in the...
Ypsi Corporation has a precredit U.S. tax of $420,000 on $2,000,000 of taxable income in the current year. Ypsi has $400,000 of foreign source taxable income characterized as foreign branch income and $150,000 of foreign source taxable income characterized as passive category income. Ypsi paid $100,000 of foreign income taxes on the foreign branch income and $30,000 of foreign income taxes on the passive category income. What amount of foreign tax credit (FTC) can Ypsi use on its U.S. tax...
Ann Corporation reported pretax book income of $1,000,000. Included in the computation were favorable temporary differences...
Ann Corporation reported pretax book income of $1,000,000. Included in the computation were favorable temporary differences of $200,000, unfavorable temporary differences of $50,000, and favorable permanent differences of $100,000. Compute the company’s book equivalent of taxable income. Use this number to compute the company’s total income tax provision or benefit. book envirement of taxable income? total income tax provision or benefit?
Ann Corporation reported pretax book income of $1,030,000. Included in the computation were favorable temporary differences...
Ann Corporation reported pretax book income of $1,030,000. Included in the computation were favorable temporary differences of $370,000, unfavorable temporary differences of $253,000, and favorable permanent differences of $149,000. Compute the company’s book equivalent of taxable income. Use this number to compute the company’s total income tax provision or benefit. Book equivalent of taxable income? Total income tax provision or benefit?
M Corporation reported 2019 book net income of $185,000. The following items were included in book...
M Corporation reported 2019 book net income of $185,000. The following items were included in book income for 2018: State A income tax expense $ 15,000 State B income tax expense $ 5,000 Federal income tax expense $49,000 Book depreciation expense $ 18,000 Municipal bond interest income $ 10,000 US government obligation interest income $ 12,000 Dividends received from 5% owned US co. $ 8,000 Separately, M Corporation computed federal tax depreciation of $26,000. A) Based on the above, compute...
Yellow Company reported net income of $520,000 for the year ended 12/31/21. Included in the computation...
Yellow Company reported net income of $520,000 for the year ended 12/31/21. Included in the computation of net income were: depreciation expense, $85,000; amortization of a patent, $40,000; income from an investment in common stock of XYZ Inc., accounted for under the equity method, $62,000; and amortization of a bond discount, $17,000. Yellow also paid an $60,000 dividend during the year. The net cash provided (used) by operating activities would be reported at ______
Gorm Inc., a cash-method C corporation, had taxable income of $250,000 for its initial taxable year...
Gorm Inc., a cash-method C corporation, had taxable income of $250,000 for its initial taxable year (year 1). A review of company records revealed the following information: Gorm’s estimated federal income tax payments made during the year totaled $40,000. The current-year tax depreciation expense on furniture and fixtures, the only asset owned by Gorm, was $12,000. If Gorm had used the alternative depreciation system (straight-line method), depreciation expense deducted would have been $5,000. Gorm had tax-exempt interest income of $21,000...
Santana Music is a​ U.S.-based MNC whose foreign subsidiary had pretax income of $58,000​; all​ after-tax...
Santana Music is a​ U.S.-based MNC whose foreign subsidiary had pretax income of $58,000​; all​ after-tax income is available in the form of dividends to the parent company. The local tax rate is 41%​, he foreign dividend withholding tax rate is5.2%​, and the U.S. tax rate is 32%. Compare the net funds available to the parent corporation ​(a) if foreign taxes cannot be applied as a credit against the U.S. tax liability and ​(b) if they can. The dividend available...
1. A corporation organized in Germany and wholly owned by the U.S. parent can be included...
1. A corporation organized in Germany and wholly owned by the U.S. parent can be included in a Federal consolidated return. True False 2. When the net accumulated taxable losses of a subsidiary exceed the parent's acquisition price, the parent's basis in the subsidiary's stock becomes negative. True False 3. When a subsidiary sells to the parent some business-use property that has appreciated from its $20,000 basis to a $50,000 fair market value, the subsidiary immediately recognizes $30,000 ordinary income...
Shaw Corporation reported pretax book income of $1,140,000. Included in the computation were favorable temporary differences...
Shaw Corporation reported pretax book income of $1,140,000. Included in the computation were favorable temporary differences of $215,000, unfavorable temporary differences of $201,000, and favorable permanent differences of $125,000. Compute the company’s deferred income tax expense or benefit. ANSWER TO COMMENT: The question is complete from the publisher. Other instances of this same problem with only different dollar values have been answered by others with solely the above information provided. If you cannot answer using only the information provided, please...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT