Cheeta Corporation earned $5 million this year from both domestic and international operations. Assume $2.2 million...
Cheeta Corporation earned $5 million this year from both domestic and international operations. Assume $2.2 million of this income qualifies as foreign-derived intangible income (FDII). If Cheeta paid no foreign income tax, calculate its U.S. income tax due.
Homework Answers
ANSWER
Total earning income =$5 million =$5,000,000
International income =$2.2 million =$2,200,000
Domestic income =$5 million -$2.2 million=2.8 Million =$2,800,000
As per federal taxation ,nominal federal corporate tax rate in the united states of America is a flat 21%.
ans as per 2017 Tax cuts and jobs Act,tax rate on foreign -derived sales ans service income is 13.125%
Total U.S income tax due =$2,800,000 *21% +$2,200,000 *13.125%
=$ 588,000 +$ 288,750
=$876,750
Total U.S income tax due =$876,750
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