Case 11-1

U. S. INternational Corporation (USIC), a U.S. taxpayer, has investments in Foreign Entities A-G. Relevant info for current fiscal year is as follows

Entity Country % Owned Activity Pre tax income (millions) INcome tax rate Dividend Withholding Net

received

Entity	Country	Percent Owned	Activity	Income before Tax ($ millions)	Tax Rate	Dividend Tax Rate	Net Amount Received by Parent ($ millions
USIC	United States		Manu.	$10	35%
A	Argentina	100%	Manu.	$1	35%	0%	$0.2
B	Brazil	100%	Manu.	$2	34%	0%	$2.5**
C	Canada	100%	Manu.	$3	26%	5%	$1.0
D	Hong Kong	100%	Invest	$2	16.5%	0%	$1.5
E	Liechtenstien	100%	Distrib.	$3	10%	4%	$0.0
F	Japan	51%	Manu.	$2	38%	5%	$0.5

G

New Zealand

60%

Banking

$4

28%

5%

$1.0

Additional Information

1. USIC's $10 million income before taxes is derived from the production and sale of products in the United States

2. Each entity is legally incorporated in its hosy country other than Entity A, which is registered with Argentinian government branch

3. Entities A,B,C, and F produce market products in their home countries.

4. Entity D makes passive investments in stocks and bonds in the Hong Kong financial markets. Income is derived solely from dividends and interest.

5. Entity E markets good purchased from (manufactured by) USIC. Of E's sales, 95% are made in Austria, Germany, and Switzerland, and 5% are made in Liechtenstein.

6. Entity G operates in the finacial services industry in New Zealand.

Required

Determine the following.

a. The amount of U.S. taxable income for each entity A-G

b. The foreign tax credit allowed in the United States, first by basket and then in total.

c. The net U.S. tax liability.

d. Any excess foreign tax credits (identify by basket).