Question

1. Egor, a United States citizen, is engaged in numerous, diverse operations and pays U.S. income tax at a rate of 37%. Egor owns MY LLC, a disregarded entity for U.S. tax purposes. MY LLC manufactures the ubiquitous product, widgets. U.S. sales result in $100,000 of taxable U.S.-source income. Egor projects that he could earn approximately $100,000 of net income in the United Kingdom (the "U.K."), where the corporate income tax rate is 20%. To further limit his liability (widgets being a very dangerous product); Egor’s MY LLC forms a private limited company in the United Kingdom. The private limited company in the U.K. is not a "per se" entity and, therefore, Egor (via the MY LLC) would consider checking-the-box to treat the private limited company in the U.K. as a disregarded entity. Assume that both the withholding tax rate on any dividends from a U.K. private limited company to the United States is 15% and that the title on all widget sales passes in the U.K.

1. If the U.K. private limited company is "checked," what is Egor's foreign tax credit position in Year 1 if an $80,000 dividend is distributed for U.K. tax purposes?

2. If the U.K. private limited company is "checked," what is Egor's foreign tax credit position in Year 1 if a dividend is not distributed for U.K. tax purposes?

3. What is Egor's foreign tax credit position in Year 1 if the U.K. private limited company is not "checked" as a disregarded entity and pays a dividend of $80,000 to the MY LLC?

4. What is Egor's foreign tax credit position in Year 1 if the U.K. private limited company is not "checked" as a disregarded entity and does not pay a dividend?