USCo purchases widgets in the United States and sells then abroad with title on resale passing in
Question:
USCo purchases widgets in the United States and sells then abroad with title on resale passing in the foreign country whose operations sold the widget. In addition to earning $100,000 of taxable income from U.S. sales, USCo earns $100,000 of taxable income from Canadian sales by its Canadian branch that is subject to tax in Canada at a 25% rate. USCo also has a Hong Kong branch that earns $100,000 of taxable income from sales that is subject to Hong Kong tax at a 15% rate. Any facts stated in an individual question relate solely to that question.
- $0
- $40,000
- $36,000
- $42,000
- $15,000 in the branch limitation category and $21,000 in the passive limitation category
If the $100,000 of taxable income earned by the Hong Kong branch constitutes interest income from various Hong Kong banks on which the Hong Kong branches incurs withholding tax a rate 15%, what is USCo's foreign tax credit?