partan Corporation, a U S corporation, reported $2 million of pretax income from its business operations in Spartania, which were conducted through a foreign branch Spartania taxes branch income at 15 percent, and the United States taxes corporate income at 21 percent Required a If the United States provided no mechanism for mitigating double taxation, what would be the total tax (U S and foreign) on the $2 million of branch profits b Assume the United States allows U S corporations to exclude foreign source income from U S taxation What would be the total tax on the $2 million of branch profits c Assume the United States allows U S corporations to claim a deduction for foreign income taxes What would be the total tax on the $2 million of branch profits d 1 Assume the United States allows U S corporations to claim a credit for foreign income taxes paid on foreign source income What would be the total tax on the $2 million of branch profits d 2 Assume the United States allows U S corporations to claim a refundable credit for foreign income taxes paid on foreign source income What would be your answer if Spartania taxed branch profits at 30 percent Only do B and D 2

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Posted on Jul 21, 2024

partan Corporation, a U.S. corporation, reported $2 million of pretax income from its business operations in Spartania, which were conducted through a foreign branch. Spartania

partan Corporation, a U.S. corporation, reported $2 million of pretax income from its business operations in Spartania, which were conducted through a foreign branch. Spartania taxes branch income at 15 percent, and the United States taxes corporate income at 21 percent.

Required:

a. If the United States provided no mechanism for mitigating double taxation, what would be the total tax (U.S. and foreign) on the $2 million of branch profits?
b. Assume the United States allows U.S. corporations to exclude foreign source income from U.S. taxation. What would be the total tax on the $2 million of branch profits?
c. Assume the United States allows U.S. corporations to claim a deduction for foreign income taxes. What would be the total tax on the $2 million of branch profits?
d-1. Assume the United States allows U.S. corporations to claim a credit for foreign income taxes paid on foreign source income. What would be the total tax on the $2 million of branch profits?
d-2. Assume the United States allows U.S. corporations to claim a refundable credit for foreign income taxes paid on foreign source income. What would be your answer if Spartania taxed branch profits at 30 percent?