19. Fullerton Company (a U.S. taxpayer) has wholly-owned subsidiaries located in Hungary and Hong Kong. The Hungarian operation purchases electric generators manufactured by Fullerton and sells them throughout Eastern Europe; 90 percent of sales are made outside of Hungary. The Hungarian subsidiary generated pretax income of $200,000 in the current year. The Hong Kong subsidiary is an investment company that makes investments in world financial markets; 100 percent of its income is generated from passive investments. The Hong Kong subsidiary generated pretax income of $100,000 in the current year. Both subsidiaries distribute 100 percent of income to Fullerton Company as a dividend each year. Corporate income tax rates and withholding rates are provided in Exhibits 8.1 and (8.3 Required: Explain why the income earned by the subsidiaries in Hungary and Hong Kong should be included in Fullerton's U.S. taxable income. . b. Determine the amount of foreign tax credit allowed by the United States in the current year and the amount of excess foreign tax credit, if any 19. Fullerton Company (a U.S. taxpayer) has wholly-owned subsidiaries located in Hungary and Hong Kong. The Hungarian operation purchases electric generators manufactured by Fullerton and sells them throughout Eastern Europe; 90 percent of sales are made outside of Hungary. The Hungarian subsidiary generated pretax income of $200,000 in the current year. The Hong Kong subsidiary is an investment company that makes investments in world financial markets; 100 percent of its income is generated from passive investments. The Hong Kong subsidiary generated pretax income of $100,000 in the current year. Both subsidiaries distribute 100 percent of income to Fullerton Company as a dividend each year. Corporate income tax rates and withholding rates are provided in Exhibits 8.1 and (8.3 Required: Explain why the income earned by the subsidiaries in Hungary and Hong Kong should be included in Fullerton's U.S. taxable income. . b. Determine the amount of foreign tax credit allowed by the United States in the current year and the amount of excess foreign tax credit, if any