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The answers in the blanks were incorrect. Could someone help me figure out how to do this correctly? Thank you! Spartan Corporation manufactures quidgets at
The answers in the blanks were incorrect. Could someone help me figure out how to do this correctly? Thank you!
Spartan Corporation manufactures quidgets at its plant in Sparta, Michigan. Spartan sells its quidgets to customers in the United States, Canada, England, and Australia. Spartan markets its products in Canada and England through branches in Toronto and London, respectively. Spartan reported total gross income on U.S. sales of $27,200,000 and total gross income on Canadian and U.K. sales of $6,800,000, split equally between the two countries. Spartan paid Canadian income taxes of $816,000 on its branch profits in Canada and U.K. income taxes of $952,000 on its branch profits in the United Kingdom. Spartan financed its Canadian operations through a $6 million capital contribution, which Spartan financed through a loan from Bank of America. During the current year, Spartan paid $360,000 in interest on the loan. Spartan sells its quidgets to Australian customers through its wholly owned Australian subsidiary. Spartan reported gross income of $2,190,000 on sales to its subsidiary during the year. The subsidiary paid Spartan a dividend of $804,000 on December 31 (the withholding tax is 0 percent under the U.S.-Australia treaty). Spartan paid Australian income taxes of $396,000 on the income repatriated as a dividend. Requirement: a. Compute Spartan's foreign source gross income and foreign tax (direct and withholding) for the current year. b. Assume 20 percent of the interest paid to Bank of America is allocated to the numerator of Spartan's FTC limitation calculation. Compute Spartan Corporation's FTC limitation using your calculation from part (a) and any excess FTC or excess FTC limitation (all of the foreign source income is put in the foreign branch FTC basket). Complete this question by entering your answers in the tabs below. Req A Reg B Compute Spartan's foreign source gross income and foreign tax (direct and withholding) for the current year. (Enter your answers in dollars not in millions of dollars.) $ 4,600,000 Foreign source gross income Foreign tax (creditable) $ 2,164,000 Reg A Reg B Assume 20 percent of the interest paid to Bank of America is allocated to the numerator of Spartan's FTC limitation calculation. Compute Spartan Corporation's FTC limitation using your calculation from part (a) and any excess FTC or excess FTC limitation (all of the foreign source income is put in the foreign branch FTC basket). (Do not round intermediate calculations. Enter your answers in dollars not in millions of dollars.) Show less 981,120 FTC limitation Excess FTCStep by Step Solution
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