What are the tax differences between operating as a foreign branch and a foreign subsidiary of a U.S. corporation? What are the advantages and disadvantages of each form?
Answer to relevant QuestionsWhy do U.S. multinationals generally like the “check-the-box” regulations? Michigan Motors is a U.S. corporation with $1 billion of U.S.-source income. In addition, Michigan Motors owns 60% of Detroit Parts, a U.S. corporation with a total of $200 million of U.S.-source in- come, and 100% of Air ...Do all U.S. corporations have an incentive to reduce their foreign taxes paid? Why or why not? What is the import of Section 482 for firms forming subsidiaries in foreign tax jurisdictions? Do tax-payers have much freedom in setting prices of goods and services that they transfer to and from their own subsidiaries? A U. S. company is planning to form a foreign subsidiary to undertake a profitable project in a country where the tax rate is 25%. The company’s tax rate in the United States is 35%. a. If the withholding tax rate on ...
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