Apache, a U.S. corporation, owns 80% of the stock in Burrito, incorporated in Country Y. Burrito reports the following results for the current year:

        ______________________________________ Gross Income __________ Deductions

Foreign base company sales income ...............$300,000 ...................... $120,000

Foreign base company services income ............ 150,000 ......................... 90,000

Dividend from Kane, a 70%-owned Country Y

           Corporation ............................................ 70,000 .............................-0-

Rental income earned in Country Y .............. 280,000 ........................ 220,000

Kane conducts substantially all its business in Country Y.

a. What amount of income must Apache recognize as a result of Burrito's activities?

b. How would your answer to Part a change if Kane were instead a 70%-owned Country M corporation?

c. How would your answer to Part b change if foreign base company sales income before deductions were instead $500,000?