Spartan Corporation, a U.S. corporation, reported $6.5 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 $6.5 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 $6.5 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 $6.5 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 $6.5 million of branch profits?

d-2. Assume the United States allows U.S. 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 30 percent?

a. total tax: ___

b. total tax: ___

c. total tax: ___

d-1. total tax: ___

d-2. total tax: ___