U S International corporation (USIC), a U S taxpayer, has investments in foreign entities A G Relevant information for these entities for the current fiscal year appears in the following table Additional information Each entity is legally incorporated in its host country other than entity A, which is registered with the Argentina government as a branch Entities A, B, C, and F produce and market products in their home countries Entity D makes passive investments in stocks and bonds in the Hong Kong financial markets Income is derived solely from dividends and interests Entity E markets goods purchased from (manufactured by) USIC Of Es sales, 95 percent are made in Austria, Germany, and Switzerland, and 5 percent are made in Liechtenstein Entity G operates in the financial services industry in New Zealand Determine the following The amount of U S taxable income for each entity A G The foreign tax credit allowed in the United States, first by basket and then in total The net U S tax liability generated from these foreign operations Hint Refer to the flowchart for determining U S taxation of foreign operations (Exhibit 11 5) begin tabular llclcccc hline Net Amount Entity Country begin tabular c Percent Owned end tabular Activity begin tabular c Income before Tax ( $ millions) end tabular begin tabular c Income Tax Rate end tabular begin tabular c Withholding Tax Rate end tabular begin tabular c by Parent ( $ millions) end tabular hline USIC United States Manufacturing $10 35 A Argentina 100 Manufacturing $1 35 0 $0 2 B Brazil 100 Manufacturing $2 34 0 $2 5 C Canada 100 Manufacturing $3 26 5 $1 0 D Hong Kong 100 Investment $2 16 5 0 $1 5 E Liechtenstein 100 Distribution $3 10 4 $0 0 F Japan 51 Manufacturing $2 38 5 $0 5 G New Zealand 60 Banking $4 28 5 $1 0 hline end tabular

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U. S. International corporation (USIC), a U.S. taxpayer, has investments in foreign entities A-G. Relevant information for these entities for the current fiscal year appears

U. S. International corporation (USIC), a U.S. taxpayer, has investments in foreign entities A-G. Relevant information for these entities for the current fiscal year appears in the following table:

Additional information:

Each entity is legally incorporated in its host country other than entity A, which is registered with the Argentina government as a branch.
Entities A, B, C, and F produce and market products in their home countries.
Entity D makes passive investments in stocks and bonds in the Hong Kong financial markets. Income is derived solely from dividends and interests.
Entity E markets goods purchased from (manufactured by) USIC. Of Es sales, 95% percent are made in Austria, Germany, and Switzerland, and 5 percent are made in Liechtenstein.
Entity G operates in the financial services industry in New Zealand.

Determine the following:

The amount of U.S. taxable income for each entity A-G.
The foreign tax credit allowed in the United States, first by basket and then in total.
The net U.S. tax liability generated from these foreign operations.

Hint: Refer to the flowchart for determining U.S. taxation of foreign operations (Exhibit 11.5).

\begin{tabular}{llclcccc} \hline & & & & & & & Net Amount \\ Entity & Country & \begin{tabular}{c} Percent \\ Owned \end{tabular} & Activity & \begin{tabular}{c} Income \\ before Tax \\ (\$ millions) \end{tabular} & \begin{tabular}{c} Income \\ Tax Rate \end{tabular} & \begin{tabular}{c} Withholding \\ Tax Rate \end{tabular} & \begin{tabular}{c} by Parent \\ (\$ millions) \end{tabular} \\ \hline USIC & United States & - & Manufacturing & $10 & 35% & - & - \\ A & Argentina & 100% & Manufacturing & $1 & 35 & 0% & $0.2 \\ B & Brazil & 100 & Manufacturing & $2 & 34 & 0 & $2.5 \\ C & Canada & 100 & Manufacturing & $3 & 26 & 5 & $1.0 \\ D & Hong Kong & 100 & Investment & $2 & 16.5 & 0 & $1.5 \\ E & Liechtenstein & 100 & Distribution & $3 & 10 & 4 & $0.0 \\ F & Japan & 51 & Manufacturing & $2 & 38 & 5 & $0.5 \\ G & New Zealand & 60 & Banking & $4 & 28 & 5 & $1.0 \\ \hline \end{tabular}