Problem $9-43($L$0.1,3,5)$

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$.\text{'}$s U$.$S$.$ taxable income?

Oasis must include

$$ of GILTI in its U$.$S$.$ taxable income, but will also get a deduction for

inclusion. As a result, its taxable income will increase by

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A GILTI tax applies to U$.$S$.$ shareholders of a CFC when that CFC generates a significant amount of income relative to its tangible assets.