Question: Omaha Inc owns 100 percent of the stock in Franco

Omaha Inc. owns 100 percent of the stock in Franco, a foreign corporation. All Franco’s income is foreign source, and its foreign income tax rate is 20 percent. This year, Franco distributed a $50,000 dividend to Omaha.
a. Assuming that Omaha is in the 35 percent tax bracket, compute its U.S. tax on the dividend.
b. How would your computation change if the foreign income tax rate was 45 percent?

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  • CreatedNovember 03, 2015
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