Dollin Inc is incorporated under Virginia law and has its corporate headquarters in Richmond Dollin is a distributor it purchases tangible goods from manufacturers and sells the goods to retailers It has a branch office through which it sells goods in the United Kingdom and owns 100 percent of a French corporation (French Dollin) through which it sells goods in France Dollin's financial records provide the following information for the year Before tax net income from sales Domestic sales$967,900UK sales (foreign source income)415,000$1,382,900Dividend income Brio Inc $8,400French Dollin (foreign source income)33,800 Dollin pays state income tax in Virginia, North Carolina, and South Carolina All three states tax their apportioned share of Dollin's net income from worldwide sales Because Virginia is Dollin's commercial domicile, it also taxes Dollin's U S source (but not foreign source) dividend income net of any federal dividends received deduction The states have the following apportionment factors and tax rates Apportionment FactorTax Rate Virginia43 19 6 00 North Carolina11 02 7 75 South Carolina39 52 5 00 Dollin paid $149,200 income tax to the United Kingdom Dollin elects to claim the foreign tax credit rather than to deduct foreign income taxes Brio Inc is a taxable U S corporation Dollin owns 2 8 percent of Brio's stock Dollin has owned 100 percent of the stock of French Dollin for 10 years None of French Dollin's earnings are considered GILTI or subpart F income Earnings of the UK branch are not considered FDII Compute Dollin's state income tax for Virginia, North Carolina, and South Carolina Compute Dollin's federal income tax Assume that Dollin paid the state taxes during the year, and no state income tax is allocable to foreign source income

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Posted on Jun 28, 2024

Dollin Inc. is incorporated under Virginia law and has its corporate headquarters in Richmond. Dollin is a distributor; it purchases tangible goods from manufacturers and

Dollin Inc. is incorporated under Virginia law and has its corporate headquarters in Richmond. Dollin is a distributor; it purchases tangible goods from manufacturers and sells the goods to retailers. It has a branch office through which it sells goods in the United Kingdom and owns 100 percent of a French corporation (French Dollin) through which it sells goods in France. Dollin's financial records provide the following information for the year:

Before-tax net income from sales:Domestic sales$967,900UK sales (foreign source income)415,000$1,382,900Dividend income:Brio Inc.$8,400French Dollin (foreign source income)33,800

Dollin pays state income tax in Virginia, North Carolina, and South Carolina. All three states tax their apportioned share of Dollin's net income from worldwide sales. Because Virginia is Dollin's commercial domicile, it also taxes Dollin's U.S. source (but not foreign source) dividend income net of any federal dividends-received deduction. The states have the following apportionment factors and tax rates:
Apportionment FactorTax RateVirginia43.19%6.00%North Carolina11.02%7.75%South Carolina39.52%5.00%
Dollin paid $149,200 income tax to the United Kingdom.
Dollin elects to claim the foreign tax credit rather than to deduct foreign income taxes.
Brio Inc. is a taxable U.S. corporation. Dollin owns 2.8 percent of Brio's stock.
Dollin has owned 100 percent of the stock of French Dollin for 10 years. None of French Dollin's earnings are considered GILTI or subpart F income.
Earnings of the UK branch are not considered FDII.

Compute Dollin's state income tax for Virginia, North Carolina, and South Carolina.
Compute Dollin's federal income tax. Assume that Dollin paid the state taxes during the year, and no state income tax is allocable to foreign source income.