Question: LearCo, a non - U . S . business entity, generates $ 4 , 0 0 0 , 0 0 0 , 0 0 0

LearCo, a non-U.S. business entity, generates $4,000,000,000 in gross receipts annually. Its U.S. subsidiary, KingCo, accounts for $750,000,000 of the annual gross receipts; KingCo's average annual gross receipts for the last three years is $820,000,000. KingCo generates U.S. taxable income of $180,000,000, after deducting a $350,000,000 management fee that it pays to LearCo. KingCo reports no U.S. tax credits. The corporate income tax rate in LearCo's country is 14%. The U.S. tax rate is 21%.

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