AMG Corporation is a foreign corporation. It owns 100% of a US subsidiary, LOO Corporation. LOO Corporation provides products and services to customers in the United States using technology owned by AMG Corporation. LOO's gross income is $100,000,000. As a result of the intellectual property transfer between the US subsidiary and its parent that makes this income possible, LOO (the US corporation) pays AMG (its foreign parent) $50,000,000. The payment is a business expense that is not subject to FDAP or treaty withholding. In addition to the payment to its foreign parent, LOO also had $10,000,000 of expenses to unrelated parties. The corporate tax rate is 21%.

If the United States considers the payments from LOO to AMG to be base erosion payments, what is the BEAT tax assessed on REE Corp.?

Answer rating: 100% (QA)

Solution The United States will consider the payments from LOO to AMG as ... View the full answer