ABC Company has income from the following countries:

 

ABC's subsidiary in Z declares a 40 percent dividend; Z's withholding tax on dividends is 5 percent. Both the branch and the distribution facility, which is wholly owned, retain all earnings. The distribution earnings are considered to be foreign-based company sales income. What is ABC's final U.S. tax liability?

Country Type of operation Gross earnings Income tax rate United states Parent 500,000 40% Branch (10,000) 25% Y Distribution 120,000 5% 100%-owned 400,000 45%