Question

ABC, Inc., a domestic corporation, owns 100% of HighTax, a foreign corporation. HighTax has $50,000,000 of undistributed E & P, all of which is attributable to general limitation income, and $30,000,000 of foreign income taxes paid. HighTax distributes a $5,000,000 dividend to ABC. The dividend, which is subject to a 5% foreign withholding tax, is ABC's only item of income during the year. The U.S. tax rate is 35%. a. ABC's deemed-paid taxes on the dividends are $, and the foreign withholding taxes actually paid are $____ b. The foreign tax credit claimed is $____ c. ABC now has excess foreign tax credits of $ ____is in general limitation basket.

Answer 1