Todor owns a U.S. corporation that operates a subsidiary corporation in Bulgaria. Because of the world wide tax approach adopted in the United States, all income of the Bulgarian subsidiary is potentially taxed twice, once in Bulgaria and again in the United States. Name and provide a brief description of the adjustments available on the U.S. return of the parent corporation which mitigate the impact of this potential double tax on all Bulgarian income?
DOUBLE TAXATION :-
It is a term meaning that taxes are charged on the same amount of income earned twice . It may happen if the income is earned in a separate county and is taxed in that foreign country , then again taxed in the domestic country
In the United States, According to the IRS and Federal law :-
United States citizens are liable to tax on their worldwide earnings , wherever they reside.Some measures
mitigate the resulting double tax liability.
i. An individual who is a resident of a foreign country or is outside the United States for an extended time is entitled to an exemption of their income.
ii. United States allows a foreign tax credit through which income tax paid to foreign countries can be offset against US income tax liability applicable to any foreign income.
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