YEAR 2017 USAco, a domestic corporation, manufactures and sells widgets inthe US and worldwide throu

YEAR 2017 USAco, a domestic corporation, manufactures and sells widgets inthe US and worldwide through its two wholly-owned foreignsubsidiaries, FORco-A (a Country A subsidiary) and FORco-B (aCountry B subsidiary). During year 2018, FORco-A had $10 million ofsales income to Country A customers, paid $1 million in foreignincome taxes and distributed no dividends. FORco-B had $20 millionof sales income to Country B customers, paid $3 million in foreignincome taxes and distributed no dividends. During the current year, USAco had $20 million of income fromtheir domestic manufacturing and sales. Assume FORco-A had all oftheir undistributed foreign earning in cash equivalents and FORco-Bhad all of their undistributed earning invested in equipment. Compute USAco’s residual US tax liability. Assume US tax rate is35% and that USAco’s does not elect any deffered payment oftaxes. Directions: Fill in USAco’s Tax Return (YEAR2017) US Sourced Income…………………………. _________million FORco-ADividend……………………………__________million FORco-A Section78…………………………__________million FORco-BDividend………………………….___________million FORco-B Section78……………………….___________million Net Section 965 inclusion (15% cash)….._________million Total………………………………………………______________ US TaxableIncome………………………..____________million US TaxRate…………………………………..____x35%_____ Total………………………………………………._______________ Pre-credit USTax………………………….._____________million Foreign TaxCredits……………………….._____________million Total…………………………………………….._______________ Residual USTax……………………………_______________million YEAR 2018 During Year 2018, FORco-A had $10 million in sales of income toCountry A customers, paid $1 million in foreign income taxes anddistribuetd an $18 million dividend. FORco-B had $20 million ofsales income to Country B customers, paid $3 million in foreignincome taxes and distributed $34 million in dividends. During the current year, USAco had $20 million of income fromtheir domestic manufacturing and sales and received a $6 miliondividend from FORco-B. Compute USAco’s residual US tax liability.Assume the US tax rate is 21% (and FORco’s US tax basis in itsassets exceed GILTI limits) Directions: Fill in USAco’s Tax Return (YEAR2018) US Sourced Income…………………………. _________million FORco-ADividend……………………………__________million FORco-A Section78…………………………__________million FORco-BDividend………………………….___________million FORco-B Section78……………………….___________million Net Section 965 inclusion (15% cash)….._________million Total………………………………………………______________ US TaxableIncome………………………..____________million US TaxRate…………………………………..____x35%_____ Total………………………………………………._______________ Pre-credit USTax………………………….._____________million Foreign TaxCredits……………………….._____________million Total…………………………………………….._______________ Residual USTax……………………………_______________million . . .

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