Questions from Federal Taxation

Q: Smile Corporation invests $2.0 million for a 49%

Smile Corporation invests $2.0 million for a 49% interest in Irehoe Inc., a newly formed Irish corporation that manufactures farm equipment. Jim, a U. S. resident, owns 10% of Irehoe. Jim owns no st...

Q: Assume the same facts as in problem 85, except that Irehoe’s

Assume the same facts as in problem 85, except that Irehoe’s income consists solely of commissions from selling farm equipment manufactured and distributed by Smile Corporation to foreign buyers. Dat...

Q: Logo Corporation, a domestic corporation, owns 100% of TAG

Logo Corporation, a domestic corporation, owns 100% of TAG, a foreign corporation. TAG is Logo’s only source of income. During the current year, TAG receives $80,000 of dividends and interest from it...

Q: Norman, a U.S. corporation, owns 100%

Norman, a U.S. corporation, owns 100% of Monterio, a foreign corporation operating in Barbados, which has no income tax. Norman ships goods directly to its foreign customers from its Atlanta manufact...

Q: As a gift for her granddaughter Ella's 13th birthday, Melanie bought

As a gift for her granddaughter Ella's 13th birthday, Melanie bought 500 shares of Soft'n Sales Corporation stock on September 25, 2012. Melanie bought the stock directly from the underwriter for $20...

Q: Martina purchases 10,000 shares of Monrovia Corporation stock for $

Martina purchases 10,000 shares of Monrovia Corporation stock for $90,000 on November 14, 2016. On June 18, 2017, Monrovia declares bankruptcy. Because the corporation’s assets are less than its lia...

Q: Petro Corporation is a U.S. corporation with operations in

Petro Corporation is a U.S. corporation with operations in several foreign countries as well as in the United States. During the current year, Petro’s worldwide taxable income is $600,000. Petro’s f...

Q: Flagler Corporation paid $75,000 in foreign taxes on $

Flagler Corporation paid $75,000 in foreign taxes on $250,000 in foreign income during the current year. Flagler's total taxable income is $800,000. a. What is Flagler's foreign tax credit? b. Assume...

Q: Readyhough Industries, a U.S. corporation with a 34

Readyhough Industries, a U.S. corporation with a 34% marginal tax rate, forms Brandon, Inc., a wholly-owned foreign corporation that operates in Ireland. In exchange for 100% of Brandon’s stock, Read...

Q: Taverez is a foreign corporation that operates a manufacturing plant in Lubbock

Taverez is a foreign corporation that operates a manufacturing plant in Lubbock, Texas. Taverez sells its products to customers outside the U. S. In the current year, Taverez’s gross revenue is $4.0...