Problem 9-42 (LO. 1, 3, 5)

Oasis Co., a U.S. shareholder, owns 100% of Shack Co. and 100% of Studio Co., both CFCs. Shack Co. has $300,000 of gross income, of which $50,000 is effectively connected income, and $30,000 is interest expense without any allocable interest income. Shack Co. has $500,000 of machinery used in its trade or business. Studio Co. has a $150,000 loss and machinery worth $1,000,000 used in its operations.

a. What is GILTI for Oasis Co.? (fill in the blank)

b. What impact do the operations of Shack Co. and Studio Co. have on Oasis Co.s U.S. taxable income?

Oasis must include $fill in the blank 2 of GILTI in its U.S. taxable income, but will also get a deduction for 50% of its GILTI inclusion. As a result, its taxable income will increase by (fill in the blank).