2: Quantco, a domestic corporation, is an engineering consulting firm that has its main offices in San Diego, California. Because Quantco does a considerable amount of business in China, it has a branch office in Beijing. During the current year, Quantco generates a total pre-tax profit of $100 million (all from active business operations), including $80 million of profits from its U.S. operations and $20 million of profits from its Chinese operations. Assume the U.S. tax rate is 35% and the Chinese rate is 40%. Compute Quantco's creditable foreign income taxes, foreign tax credit limitation, and excess credits (if any). Now assume that Quantco has a second foreign branch office in Singapore which generates $10 million of profits (all from active business operations), on which Quantco pays Singapore taxes. Assume the Singapore tax rate is 25%. Recompute Quantco's creditable foreign income taxes, foreign tax credit limitation, and excess credits. What is the name of the phenomenon by which the Singapore profits resulted in the elimination of the excess credits on the Chinese profits? Problem 4: Shedco, a domestic corporation, operates in Asia through Shed1, a wholly owned Hong Kong subsidary. At the end of the current year, Shed1's pools of post-1986 undistributed earnings and post-1986 foreign income taxes are as follows: Post-1986 undistributed earnings Post-1986 income taxes General limitation income $24 million $18 million Passive income $12 million $3 million Totals $36 million $21 million During the current year, Shed1 distributed a $6 million dividend to Shedco. Compute Shedcos deemed paid foreign tax credit, as well as the residual U.S. tax, if any, on the dividend Shedco received from Shed1. Assume the U.S. tax rate is 35%