1.Ramy Corporation, a U.S Corporation, incorporates Amr Corporation, a new wholly owned entity in Germany. Under both U.S. and German law, this entity is a corporation. Ramy Corporation faces a 35% U.S. Tax rate and Amr Corporation faces a 20% German Tax rate. Germany also imposes a 5% withholding tax on dividends.

Amr earns $1,500,000 in net profits from its German activities.

How much U.S. income tax will Ramy Corporation pay for the current year as a result of Amr Corporations earnings, assuming (1) no dividend payment, (2) a dividend payment, and (3) characterization of the earnings as Subpart F Income. Explain.

2. Amr Corporation reports the following results for 2015:

Taxable Income 400,000

Federal income taxes per books 135,000

Tax Exempt Interest Income 80,000

Interest on loans to purchase tax exempt bonds 20,000

Book Depreciation exceeding tax depreciation 30,000

Net Capital Gain 25,000

Insurance Premium on life of Corporate Officer 5,000

Excess Charitable contributions carried over to next year15,000

NOL carryover to 2015 40,000

Compute Income Per Books after Tax

3. Squash Corporation has nexus in Kentucky, New York, and New Jersey. It generated the following income and deductions in 2015:

Sales (net) 7,000,000

Ordinary Operating Expenses 5,000,000

Federal Tax Depreciation 600,000

Kentucky Tax Depreciation 150,000

NY Tax Depreciation 200,000

NJ Tax Depreciation50,000

Interest Income on Federal Obligations 200,000

Interest income on NY Obligations 100,000

Loss (Ordinary) on Disposal of NY Plant400,000

Gain (Ordinary) on Disposal of NJ plant500,000

NOL Carryover from 2014 800,000

A.Determine Federal Taxable Income

B.Determine NY Taxable Income

C.Determine NJ Taxable Income

D.Determine Kentucky Taxable Income

The activities in NY, NJ and Kentucky are as follows:

NYNJKentucky Total

Sales1,000,0008,400,0005,000,00014,400,000

Property500,0001,500,000300,0002,300,000

Payroll800,0003,000,0002,000,0005,800,000

NY uses a three factor formula under which sales, property and payroll are equally weighted. NJ uses a single factor formula that consists of sales. Kentucky uses a three factor formula under which sales are counted twice and property and payroll are equally weighted.

NY and NJ do not permit NOL Carryovers. Kentucky does permit NOL carryovers.