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Spartan Corporation, a U . S . corporation, reported $ 2 . 3 million of pretax income from its business operations in Spartania, which were
Spartan Corporation, a US corporation, reported $ million of pretax income from its business operations in Spartania, which were conducted through a foreign branch. Spartania taxes branch income at percent, and the United States taxes corporate income at percent.
Required:
a If the United States provided no mechanism for mitigating double taxation, what would be the total tax US and foreign on the $ million of branch profits?
b Assume the United States allows US corporations to exclude foreign source income from US taxation. What would be the total tax on the $ million of branch profits?
c Assume the United States allows US corporations to claim a deduction for foreign income taxes. What would be the total tax on the $ million of branch profits?
d Assume the United States allows US corporations to claim a credit for foreign income taxes paid on foreign source income. What would be the total tax on the $ million of branch profits?
d Assume the United States allows US corporations to claim a credit for foreign income, taxes paid on foreign source income. What would be your answer if Spartania taxed branch profits at percent?
Note: For all requirements, enter your answers in dollars and not in millions of dollars.
tablea Total tax,b Total tax,c Total tax,d Total tax,d Total tax,
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