FORco wants to open a sales office in the United States. Because FORco does not want to be subject to any withholding tax on dividends, FORco does not form a U.S. subsidiary, but instead operates in the U.S. as a branch. If the U.S. sales office is profitable and distributes cash, FORco may be subject to:

1. the withholding tax on dividends only.

2. the branch profits tax only.

3. both the withholding tax on dividends and the branch profi ts tax.

4. transfer pricing penalties.