Velocity, Inc., a foreign corporation, operates a U.S. branch. It reports the following tax results and other

Question:

Velocity, Inc., a foreign corporation, operates a U.S. branch. It reports the following tax results and other information for the year.

Pretax earnings effectively connected with a U.S. trade or business ……….. $900,000

U.S. corporate tax (at 34%) ………………………………………………… 306,000

Remittance to home office ………………………………………………… 400,000

Increase in U.S. net equity ………………………………………………… 194,000

a. Compute Velocity’s dividend equivalent amount for the tax year.

b. Determine Velocity’s liability for the branch profits tax for the year.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...