Gamboa's Tax Averaging Gamboa, Incorporated, is a relatively new US-based retailer of specialty fruits and vegetables. The firm is vertically integrated with fruit and vegetable-sourcing subsidiaries in Central America, and distribution outlets throughout the southeastem and northeastem regions of the United States. Gamboa's two Central American subsidiaries are in Belize and Costa Rica Maria Gamboa, the daughter of the firm's founder, is being groomed to take over the firm's financial management in the near future. Like many firms of Gamboa's size, it has not possessed a very high degree of sophistication in financial management simply out of time and cost considerations. Maria, however, has recently finished her MBA and is now attempting to put some specialized knowledge of US taxation practices to work to save Gamboa money. Her first concem is tax averaging for foreign tax Sabilities arising from the two Central American subsidiaries As shown in the popup window, . Costa Rican operations are sightly more profitable than Belize, which is particularly good since Costa Rica is a relatively low-tax country Costa Rican corporate taxes are a fal 30%, and there are no withholding taxes imposed on dividends paid by foreign firms with operations there. Belize has a higher corporate income tax rate, 40%, and imposes a 10% withholding tax on all dividends distributed to foreign Investors. The current U.S. corporate income tax rate is 35% a. If Maria Gamboa assumes a 60% payout rate from Maria averaged the tax credits/Sabilities of the two units? each subsidiary, what are the additional taxes due on foreign-sourced income from Belure and Costa Rica individually? How much in additional U.S. taxes would be due if b. Keeping the payout rate from the Belize subsidiary at 60%, how should Maria change the payout rate of the Costa Rican subsidiary in order to most efficiently manage her total foreign tax bi e. What is the minimum effective tax rate that Mana can achieve on her foreign-sourced income? a. Maris Gambo assumes a 60% payout rate from each subsidiary, calculate the additional taxes due of excess foreign tax credits on foreign-sourced income from Betire individually in the flowing table (Round to the nearest dolar Subsidiary Income Statement Belize Costa Rica Eamings before taxes Less corporate income t Net Income Oributed earnings Less withholding taxes on dividends Net dividend remited to US peren US Tex Calculation Net dividend remed Withholding income t Proportion of foreign income taxes Cred-up dividend $ $ 1,100,000 Combined The US by Fond Addoonal US (Click on the following icon in order to copy its contents into a spreadsheet.) Earnings before taxes Belize $1,100,000 Costa Rica $1,700,000 Corporate income tax rate 40% 30% Dividend withholding tax rate 10% 0%