Assume that a US company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withholding tax rate on dividends is 5 percent. If the subsidiary declares a 100% dividend, what is the amount of its direct and deemed direct tax credit?

a. $40,000

b. $3,000

c. $43,000

d. $34,000

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