Egor, a United States citizen, is engaged in numerous, diverse operations and pays U S income tax at a rate of 37 Egor owns MY LLC, a disregarded entity for U S tax purposes MY LLC manufactures the ubiquitous product, widgets U S sales result in $100,000 of taxable U S source income Egor projects that he could earn approximately $100,000 of net income in the United Kingdom (the U K ), where the corporate income tax rate is 20 To further limit his liability (widgets being a very dangerous product) Egors MY LLC forms a private limited company in the United Kingdom The private limited company in the U K is not a per se entity and, therefore, Egor (via the MY LLC) would consider checking the box to treat the private limited company in the U K as a disregarded entity Assume that both the withholding tax rate on any dividends from a U K private limited company to the United States is 15 and that the title on all widget sales passes in the U K If the U K private limited company is checked, what is Egor's foreign tax credit position in Year 1 if an $80,000 dividend is distributed for U K tax purposes If the U K private limited company is checked, what is Egor's foreign tax credit position in Year 1 if a dividend is not distributed for U K tax purposes What is Egor's foreign tax credit position in Year 1 if the U K private limited company is not checked as a disregarded entity and pays a dividend of $80,000 to the MY LLC What is Egor's foreign tax credit position in Year 1 if the U K private limited company is not checked as a disregarded entity and does not pay a dividend

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Posted on Jul 25, 2024

Egor, a United States citizen, is engaged in numerous, diverse operations and pays U.S. income tax at a rate of 37%. Egor owns MY LLC,

Egor, a United States citizen, is engaged in numerous, diverse operations and pays U.S. income tax at a rate of 37%. Egor owns MY LLC, a disregarded entity for U.S. tax purposes. MY LLC manufactures the ubiquitous product, widgets. U.S. sales result in $100,000 of taxable U.S.-source income. Egor projects that he could earn approximately $100,000 of net income in the United Kingdom (the "U.K."), where the corporate income tax rate is 20%. To further limit his liability (widgets being a very dangerous product); Egors MY LLC forms a private limited company in the United Kingdom. The private limited company in the U.K. is not a "per se" entity and, therefore, Egor (via the MY LLC) would consider checking-the-box to treat the private limited company in the U.K. as a disregarded entity. Assume that both the withholding tax rate on any dividends from a U.K. private limited company to the United States is 15% and that the title on all widget sales passes in the U.K.
1. If the U.K. private limited company is "checked," what is Egor's foreign tax credit position in Year 1 if an $80,000 dividend is distributed for U.K. tax purposes?
2. If the U.K. private limited company is "checked," what is Egor's foreign tax credit position in Year 1 if a dividend is not distributed for U.K. tax purposes?
3. What is Egor's foreign tax credit position in Year 1 if the U.K. private limited company is not "checked" as a disregarded entity and pays a dividend of $80,000 to the MY LLC?
4. What is Egor's foreign tax credit position in Year 1 if the U.K. private limited company is not "checked" as a disregarded entity and does not pay a dividend?