Worldwide United Corporation (WUC), a U.S. taxpayer, manufactures and sells products through a network of foreign branches and wholly-owned foreign subsidiaries. Relevant information for these entities for the current fiscal year appears in the following table:

Case 8-1 Worldwide United Corporation Worldwide United Corporation (WUC), a US taxpayer, manufactures and sells products through a network of foreign branches and wholly-owned foreign subsidiaries Relevant information for these entities for the current fiscal year appears in the following table Income Tax Rate Net Dividend Receved by Parent Entity B Country Bahrain Bermuda Hong Kong Hungary Ireland Malaysia Mexico Switzerland D E F G Legal Form Branch Corporation Corporation Corporation Corporation Branch Corporation Corporation Activity Sales Sales Manufacturing Sales Investment Manufacturing Manufacturing Service Income before Tax $1,000,000 8,000,000 10,000,000 10,000,000 2,000,000 10,000,000 5,000,000 500.000 Dividend Withholding Tax Rate 0% O 0 0 0 0 5 35 0% O 16.5 9 12.5 24 30 17 $1,000,000 8,000,000 8,350,000 9,100,000 1,750,000 7.600.000 3.3250,000 269,750 H page 368 Additional Information 1 Entities C, F, and manufacture products that are sold in their home countries as well as to sister entities within the WUC group. 2.Entity A purchases finished products from Entity F and then sells them throughout the Middle East. Only 5 percent of A's income is generated from sales to customers in Bahrain: 95 percent of As income is from sales to foreign customers 3. Entity purchases finished products from Entity G and sells them throughout North and South America Only 1 percent of B's income is from sales to customers in Bermuda 99 percent of B's income is from sales to foreign customers. 4 Entity D purchases finished products from Entity and then sells them throughout Europe Only 40 percent of D's income is generated from sales to customers in Hungary, 60 percent of D's income is from sales to foreign customers 5.Entity E makes passive investments in stocks and bonds in European financial markets. All of E's income is derived from dividends and interest 6. Entity H provides accounting and other management services to WUC's other foreign operations. All of H's income is derived from providing services to Sister companies within the WUC group Required: 1 2. Determine the amount of US taxable income for each entity (A B, C, D, E, F, G, and H) Calculate the foreign tax credit allowed in the United States first by foreign tax credit basket and then in total Determine the net US tax liability on foreign source income Determine any excess foreign tax credits and identity by basket 3 4 110 016 wilable at hinas sacs misc/44013.pdf (accessed January 162018) Case 8-1 Worldwide United Corporation Worldwide United Corporation (WUC), a US taxpayer, manufactures and sells products through a network of foreign branches and wholly-owned foreign subsidiaries Relevant information for these entities for the current fiscal year appears in the following table Income Tax Rate Net Dividend Receved by Parent Entity B Country Bahrain Bermuda Hong Kong Hungary Ireland Malaysia Mexico Switzerland D E F G Legal Form Branch Corporation Corporation Corporation Corporation Branch Corporation Corporation Activity Sales Sales Manufacturing Sales Investment Manufacturing Manufacturing Service Income before Tax $1,000,000 8,000,000 10,000,000 10,000,000 2,000,000 10,000,000 5,000,000 500.000 Dividend Withholding Tax Rate 0% O 0 0 0 0 5 35 0% O 16.5 9 12.5 24 30 17 $1,000,000 8,000,000 8,350,000 9,100,000 1,750,000 7.600.000 3.3250,000 269,750 H page 368 Additional Information 1 Entities C, F, and manufacture products that are sold in their home countries as well as to sister entities within the WUC group. 2.Entity A purchases finished products from Entity F and then sells them throughout the Middle East. Only 5 percent of A's income is generated from sales to customers in Bahrain: 95 percent of As income is from sales to foreign customers 3. Entity purchases finished products from Entity G and sells them throughout North and South America Only 1 percent of B's income is from sales to customers in Bermuda 99 percent of B's income is from sales to foreign customers. 4 Entity D purchases finished products from Entity and then sells them throughout Europe Only 40 percent of D's income is generated from sales to customers in Hungary, 60 percent of D's income is from sales to foreign customers 5.Entity E makes passive investments in stocks and bonds in European financial markets. All of E's income is derived from dividends and interest 6. Entity H provides accounting and other management services to WUC's other foreign operations. All of H's income is derived from providing services to Sister companies within the WUC group Required: 1 2. Determine the amount of US taxable income for each entity (A B, C, D, E, F, G, and H) Calculate the foreign tax credit allowed in the United States first by foreign tax credit basket and then in total Determine the net US tax liability on foreign source income Determine any excess foreign tax credits and identity by basket 3 4 110 016 wilable at hinas sacs misc/44013.pdf (accessed January 162018)