American Foods Co. (a US corporation) owns 100% of Lucky Foods Co., a foreign per se corporation with $45,000,000 of average tangible assets. In the current year, Lucky Foods had foreign taxable income of $730,000,000 on which it paid 16% foreign tax (i.e., $116,800,000). Lucky Foods paid no royalties, dividends, or any other payments to American Foods and American Foods has no other foreign income in the current year. Now assume none of Lucky Foods income is treated as Subpart F or earnings invested in US property and there are no other relevant facts that could complicate things. 

How much US tax will American Foods as a result of owning Lucky Foods? Briefly explain and/or show all well-labeled computations necessary to support your response.

Answer rating: 100% (QA)

To determine how much US tax American Foods will pay as a result of owning Lucky Foods we need to ca... View the full answer