Question: Elmwood Inc a domestic corporation owns 15 of Correy Ltd

Elmwood, Inc., a domestic corporation, owns 15% of Correy, Ltd., a Hong Kong corporation. The remaining 85% of Correy is owned by Fortune Enter prises, a Canadian corporation. At the end of the current year, Correy has $400,000 in undistributed E & P and $200,000 in foreign taxes related to this E & P.
On the last day of the year, Correy pays a $40,000 dividend to Elmwood. Elm wood's taxable income before the dividend is $200,000. What is Elmwood's tax liability after consideration of the dividend and any allowed FTC, assuming a 34% U.S. tax rate?

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  • CreatedSeptember 09, 2015
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