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15. Mama Corporation (a U.S. taxpayer) has a wholly-owned sales subsidiary in the Bahamas (Bahamamama Ltd.) that purchases finished goods from its U.S. parent
15. Mama Corporation (a U.S. taxpayer) has a wholly-owned sales subsidiary in the Bahamas (Bahamamama Ltd.) that purchases finished goods from its U.S. parent and sells those goods to customers throughout the Caribbean Basin. In the most recent year, Bahamamama generated income of $100,000. There are no income or withhold- ing taxes in the Bahamas. Required: a. Determine the amount of income taxable in the United States assuming that Bahamamama makes 20 percent of its sales in the Bahamas and 80 percent in other countries. b. Determine the amount of income taxable in the United States assuming that Bahamamama makes 40 percent of its sales in the Bahamas and 60 percent in other countries.
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