RadioCo, a domestic corporation, owns 100% of TVCo, a manufacturing facility in Ireland. TVCo has no operations or activities in the United States. The U.S. tax rate is 35%, and the Irish tax rate is 15%. For the current year, RadioCo earns $200,000 in taxable income from its U.S. operations. TVCo earns $800,000 in taxable income from its operations, pays $120,000 in taxes to Ireland, and makes no distributions to RadioCo.
a. Determine RadioCo’s effective tax rate for book purposes with and without the per-anent reinvestment assumption of ASC 740-30 (APB 23).
b. Under what conditions should RadioCo adopt ASC 740-30 (APB 23) for TVCo’s earnings?

  • CreatedMay 25, 2015
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