Indeco, a U.S. C corporation, operates Grange, a sales branch in Staccato.Indeco?s U.S. corporate marginal tax rate is 35%; it is 20% in Staccato.Grange?s pre-tax profit for the year is $1 million.There is no income tax treaty between the United States and Staccato.Staccato?s currency is the U.S. dollar.Compute Indeco?s combined U.S. and foreign income tax on the Grange profits, under each of the following assumptions.

US Income Tax Staccato Income Tax Combined Tax Liability

a.U.S. income tax law allows no deduction or

credit for foreign income taxes paid.

b.U.S. income tax law allows only a deduction

for foreign income taxes paid.

c.U.S. income tax law allows only an exclusion

of foreign branch profits.

d.U.S. income tax law allows only a credit for the full

amount of foreign income taxes paid.

e.U.S. income tax law allows only a credit for the full amount

of foreign income taxes paid. The applicable Staccato tax rate is now 40%.

f.U.S. income tax law allows only a credit for the full amount

of foreign income taxes paid, but limited currently to the corresponding

tax on this income at U.S. rates.The applicable Staccato tax rate is now 40%.

Chapter 25 34. LO.1,5 Indeco, a U.S. C corporation, operates Grange, a sales branch in Staccato. Indeco's U.S. corporate marginal tax rate is 35%; it is 20% in Staccato. Grange's pre-tax profit for the year is $1 million. There is no income tax treaty between the United States and Staccato. Staccato's currency is the U.S. dollar. Compute Indeco's combined U.S. and foreign income tax on the Grange profits, under each of the following assumptions. U.S. Income Tax a. U.S. income tax law allows no deduction or credit for foreign income taxes paid. b. U.S. income tax law allows only a deduction for foreign income taxes paid. c. U.S. income tax law allows only an exclusion of foreign branch profits. d. U.S. income tax law allows only a credit for the full amount of foreign income taxes paid. e. U.S. income tax law allows only a credit for the full amount of foreign income taxes paid. The applicable Staccato tax rate is now 40%. f. U.S. income tax law allows only a credit for the full amount of foreign income taxes paid, but limited currently to the corresponding tax on this income at U.S. rates. The applicable Staccato tax rate is now 40%. Staccato Income Tax Combined Tax Liability