Rand Corporation owns 100 percent of the stock of Flo, a foreign corporation con-ducting business in Portugal. Flo generates $100,000 before-tax annual income on which it pays a 30 percent Portuguese tax. Flo can reinvest its after-tax earnings for an indefinite time period in Europe at a 7 percent before-tax rate of return. Alternatively, Flo could distribute its after-tax earnings to Rand, which could invest the funds in the United States at a 9 percent before-tax rate of return. Assuming that Rand’s U.S. tax rate is 35 percent, should it repatriate Flo’s earnings to maximize its rate of return?
Answer to relevant QuestionsChloe Inc. is an Oklahoma corporation that generates $2 million U.S. source income annually. Chloe recently opened a branch office in Country A, which has a 38 percent income tax. Chloe forecasts that this branch will earn ...Explain why an individual’s combined standard deduction and exemption amount can be considered a bracket of income taxed at a zero rate. Why is the formula for computing individual taxable income so much more complicated than the formula for computing corporate taxable income? Mr. and Mrs. L had the following income items: Dividend eligible for 0% preferential rate ……………… $ 3,400 Capital gain eligible for 0% preferential rate ………….. 2,900 Mrs. L’s salary ...Mr. M’s salary was $177,000, and Mrs. M’s salary was $114,000. They had no other income items, no above-the-line or itemized deductions, and no dependents. a. Compute their tax on a joint return. b. Compute their ...
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