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(Solved): In 2019, Liter Inc., a domestic corporation engaged in the distribution of plastic bottles, generate ...



In 2019, Liter Inc., a domestic corporation engaged in the distribution of plastic bottles, generates the following pre-tax income/loss

$50,000 of income from its wholly owned UK subsidiary that made a check the box election to be treated as a disregarded entity. The subsidiary is engaged in the same business as Liter. The UK subsidiary paid $20,000 of income taxes.

$100,000 sales income to US customers located in the US

Assume Liter is in the 21% tax bracket on all income.

What is Liter’s net US tax liability for 2019 after applying applicable foreign tax credits?

a.$11,500
b.$16,800
c.$21,000
d.$27,300
e.$31,500


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Calculation of Total Income   

Total Income = $50,000   $100,000
= $150,000

Tax R...
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