Oasis Co., a U.S. shareholder, owns 100% of Shack Co. and 100% of Studio Co., both CFCs. Shack Co. has $300,000 of gross income, of which $50,000 is effectively connected income, and $30,000 is interest expense without any allocable interest income. Shack Co. has $500,000 of machinery used in its trade or business. Studio Co. has a $150,000 loss and machinery worth $1,000,000 used in its operations.

a. What is GILTI for Oasis Co.?

b. What impact do the operations of Shack Co. and Studio Co. have on Oasis Co.’s U.S. taxable income?

Answer rating: 100% (QA)

a GILTI stands for Global Intangible LowTaxed Income It is defined by the United States IRS as income from a controlled foreign corporation CFC that e... View the full answer