USCo, a C corporation, owns FORco, a foreign corporation. On December 31, 2017, FORco has $5 million of earnings and profits, $2 million of which are attributable to cash or cash equivalents. What is the amount of the transition tax (a/k/a Deemed Repatriation Regime)?
Question 22 options:
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Ans:4:$550,000 is Correct Answer
2000,000*15.5%=$310,000
3000,000*8%=$240,000
Total=$550,000
Explanation:
As Per Provisions of IRS 965
Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period .
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Cash dividends declared (2017)
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Cash dividends paid (2017)
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