Allen Blay owns 100% of the stock in AB Corporation, organized ten years ago in California. AB operates a foreign branch in Country A. In the current yea r, AB reports $500,000 of taxable income from U.S. activities. The branch reports a 400,000 pirog loss, which translates into a $60,000 (U.S.) loss. Neither the branch nor the U.S. corporation paid Country A income taxes in the current year.

AB owns 50% of FC1, incorporated in Country B. Bob Haynes, a resident of Country B, owns the remaining FC1 stock. In the current yea r, FC1 generated 200,000 kira of Country B taxable income. The Country B corporate income tax rate is 25%. On December 31, FC1 remitted 50,000 kira of current year profits to AB. The kira-U.S. dollar exchange rate on December 31 was 1.25 kira = $1.00 (U.S.). Amounts repatriated to the United States are subject to a 15% Country B withholding tax. The United StatesCountry B tax treaty reduces this rate to 10%.

AB owns 100% of the stock in FC2, incorporated in Country C. FC2 purchases electronic testing equipment from AB and employs a local sales force to distribute the equipment throughout the region. Forty percent of the FC2 sales are made to customers in Country C. The remaining sales are made to customers in Country D. Total pre-tax profits from FC2's sales were 275,000 tesos in the current year. FC2 remitted none of its profits to AB. FC2 earned an additional 200,000 tesos of pre-tax profits from manufacturing electronic testing equipment from parts produced by Country C companies and selling this equipment in Countries C and D. FC2 paid 60,000 tesos of Country C taxes on income derived from its current year activities. The teso-U.S . dollar exchange rate on December 31 was 1.5 tesos = $ 1.00 (U.S. ). FC2 remitted no profits to the United States. The profit margins on sales of electronic testing equipment in the Country C and D markets are substantially higher than those in the U.S. market.

In June of the current year, AB assigned Brad Gould to work for FC2. Brad relocated from Sunnyvale, California, to Country C under a three-year employment contract. 

Required: 

Explain the U.S. tax consequences of each of AB's overseas activities.