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A taxpayer is headquartered in the U.S. and operates as a CFC in Panama. The company's position is that they are permanently reinvested under APB
A taxpayer is headquartered in the U.S. and operates as a CFC in Panama. The company's position is that they are permanently reinvested under APB 23. The U.S. tax rate is 35% and the Panama tax rate is 5%. The requirements to this problem are: i. Calculate a book to tax by country (6 points) ii. Show the journal entry to record the provision under ASC 740 by country (4 points) iii. Calculate the rate reconciliation by country (4 points) U.S. Panama 800,000 50,000 Unfavorable Permanent Difference 80,000 5,000 Favorable Permanent Difference 72,000 4,500 Favorable Temporary Difference 250,000 500 Unfavorable Temporary Difference 10,000 25,000 Nonrefundable Tax Credits 50,000 1,000
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