CLA Limited, a U.S. based company and taxpayer, has investments in Foreign Entities A-G. Relevant information for these entities for the current fiscal year appears in the following table:

Entity

Country

Percent Owned

Activity

Income before Tax ($ millions)

Income Tax Rate

Dividend Withholding Tax Rate

Net Amount Received by Parent($ millions)

CLA

USA

-

Manufacturing

$10.00

35%

-

-

A

Argentina

100%

Manufacturing

$1.00

35%

0%

$0.20

B

Brazil

100%

Manufacturing

$2.00

34%

0%

$2.50

C

Canada

100%

Manufacturing

$3.00

26%

5%

$1.00

D

Hong Kong

100%

Investment

$2.00

16.5%

0%

$1.50

E

Liechtenstein

100%

Distribution

$3.00

10%

4%

$-

F

Japan

51%

Manufacturing

$2.00

38%

5%

$0.50

G

New Zealand

60%

Banking

$4.00

28%

5%

$1.00

Additional Information

1.CLA Limited has $10 million income before tax is derived from the production and sale of products in the United States.

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

3.Entities A, B, C, and F produce and 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) CLA Limited. Of E's sales, made in Liechtenstein.

6.Entity G operates in the chemical 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 Sates, first by basket and then in total.

c.The net U.S. tax liability.

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