ForCo, a German corporation, conducts operations in the United States through a branch. The branch employs a number of people and maintains an office in New York City and a warehouse in New Jersey. During 2017, the U.S. branch reports income and related expenses as follows:

	Income	Expenses*
Interest income on deposits with U.S. banks	$10,000	$0
Dividends from unrelated U.S. corporations	$25,000	$5,000
Income from sales of merchandise **	$3,000,000	$1,600,000
Rental income on excess warehouse space	$10,000	$8,000

Expenses do not include U.S. tax liabilities; assume a U.S. corporate tax rate of 35%.

* * Sales of merchandise represent inventory purchased from an unrelated third party and resold. The $3,000,000 of sales revenue represents $2,500,000 from sales to U.S. customers and $500,000 of sales to customers in Canada (title passage occurred in Canada) through the U.S. office, and that the warehouse ships.

Assume that the U.S. branch has no liabilities, and that effectively connected taxable income and effectively connected earnings and profits are the same (except for any reduction on account of U.S. income taxes). The branch had U.S. net equity of $5,000,000 at the beginning of the year, $3,000,000 of which represents non-previously taxed effectively connected income, and U.S. net equity of $5,500,000 at the end of the year. Further assume that FDAP type income is not of a type that it would be automatically included in ECI.

Assuming that no tax treaty applies, determine the total amount of U.S. tax that ForCo will pay as a result of the operations of its U.S. branch. Show all work.

Briefly discuss how the tax treaty between the United States and Germany might impact your answer in (a).

Briefly discuss how your answers to a. and b. might change if the U.S. operations were conducted through a subsidiary as opposed to a branch.

Briefly discuss SALT issues associated with FORcos U.S. operations.