Caf du Monde, a U.S. corporation that is a purveyor of coffee, transfers its trademark to wholly
Question:
Café du Monde, a U.S. corporation that is a purveyor of coffee, transfers its trademark to wholly owned CDM Enterprises, organized in the Republic of Anastasi, which does not have an income tax. Café du Monde also transfers to CDM $5.6 million in coffee roasting equipment for lease to restaurants in the region. CDM is the only foreign corporation in which Café du Monde has an equity investment. This year, CDM earns $3.2 million in royalties from licensing the trademark to coffee houses in the Kingdom of Aspina. It also earns $630,000 in rents from leasing the equipment to restaurants in the Salduran Republic. Allocable to the royalties are $185,000 in administrative expenses. Allocable to the rents are $90,000 in selling expenses. Café du Monde’s qualified business asset investment is $17.1 million.
a. What is Café du Monde’s GILTI inclusion?
b. What is Café du Monde’s GILTI deduction?
Step by Step Answer:
Federal Taxation 2021 Corporations, Partnerships, Estates & Trusts
ISBN: 9780135919460
34th Edition
Authors: Timothy J. Rupert, Kenneth E. Anderson, David S. Hulse