Alan Jones, a U.S. citizen, incorporates D Corp., a non-treaty Country X company, to do active business in Country X. There is no tax treaty between the U.S. and Country X. D Corp. has Country X taxable income of $500,000 and pays Country X income taxes of $100,000, i.e., an effective 20% tax rate. D Corp. then pays Alan a dividend of $400,000 consisting of its Country X after-tax earnings and profits. Alan is in the 37% tax bracket. How much will Alan pay in income tax to the U.S. with respect to the dividend?

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To determine how much Alan will pay in income tax to the US with respect to the dividend received fr... View the full answer