Question

2. Copper Inc, a U.S. parent, operates an unincorporated branch in Russia. On its U.S. tax return, Copper Inc. reports $900,000 of taxable income from Russian branch and $2 million of taxable income from its U.S. operations. copper Inc. paid $100,000 of Russian taxes related to its branch operation in Russia. Calculate Copper Inc.’s U.S. tax liability assuming 21% flat tax rate and taking foreign tax credit benefit under Section 901. Please show all calculations.

3. 10 friends form an S Corporation named “Diamond” in year 2019 and contribute $10,000 each. Assume there are no nonresident aliens in this corporation. In the year 2019, Jason and Hellen, starts taking distributions of $15,000 each without receiving any reasonable salary. Both these shareholders devote almost 100% of their time to this business. Please describe in detail, the tax implications on this distribution to the company and to the shareholders. Assume the business made money and has positive AAA account balance. explain in detail

4. Roxanne starts the new business and she needs your help. She thinks she “pays too much in taxes”. She needs limited liability protection for her business but also does not want to spend too much time in incorporation and administrative expenses. She has no business partner and her husband helps her in the business. She thinks she may need capital in the future and therefore an additional business partner may be needed. She estimates that she could make about $25,000,000 in revenue and about $1,000,000 in profits during the first year. Roxanne keeps no inventory. Roxanne also heard from her friend  that there are some new deductions/benefits for small business. Please advise Roxanne for structuring her business. explain in detail

Answer 1

Answer ☺ Given information, branch inromc = $900,000 . Russian operations income = $ 3000,000 Accordingly The total us taxable income - $900,000 + $ 2,000,000 -$2900,000 inc' Us ex on this account = 21900,000 X 1 . = 604,000 The FTC dimit in the general income copper = 900,000 X 21-). - 199,000 because the actual farcian’income-faves av 100,000 acordingly, copper Incy' us toz net lability +604,000–100.20 = 509,000 i copper ine's. u.s tax liability = $509,000