Reference no: EM131144735
International Taxation - Foreign Persons Doing Business in the US
Answer all of the following questions.
1. Cholati is a foreign corporation that produces fine chocolates for sale worldwide. Cholati markets it chocolates in the United States through a U.S. limited liability company that is treated as a disregarded entity for U.S. tax purposes. The hybrid branch operates a sales office located in New York City. During the current year, Cholati's effectively connected earnings and profits are $3 million, and its U.S. net equity is $6 million at the beginning of the year, and $4 million at the end of the year. In addition, a review of Cholati's interest expense account indicates that it paid $440,000 of portfolio interest to an unrelated foreign corporation, $200,000 of interest to a foreign corporation which owns 15% of the combined voting power of Cholati's stock, and $160,000 of interest to a domestic corporation.
a.) Compute Cholati's branch profits tax, and
b.) Determine its branch interest withholding tax obligations. Assume that Cholati does not reside in a treaty country.
2. Wheelco, a foreign corporation, manufactures motorcycles for sale worldwide. Wheelco markets its motorcycles in the United States through Wheely, a wholly-owned U.S. sales subsidiary that derives all of its income from U.S. business operations. Wheelco also has a creditor interest in Wheely, such that Wheely's debt to equity ratio is 3 to 1, and Wheely makes annual interest payments of $60 million to Wheelco. The results from Wheely's first year of operations are as follows:
Sales .......................................................... $180 million
Interest income .......................................... $6 million
Interest expense (paid to Wheelco) ..........($60 million)
Depreciation expense ................................($30 million)
Other operating expenses .........................($81 million)
Taxable income .......................................... $15 million
Assume the U.S. corporate tax rate is 35%, and that the applicable tax treaty exempts Wheelco's interest income from U.S. withholding tax. Compute Wheely's interest expense deduction.
3. A foreign corporation can structure its U.S. operations as either a branch or a subsidiary. What are the tax advantages of operating in the United States through a separately incorporated subsidiary? What are the tax advantages of operating in the United States through an unincorporated branch? What general business factors should be considered when choosing between the branch and subsidiary forms of doing business in the United States?
Could currency at least be eliminated
: Could currency at least be eliminated? How? (Lest all this seem too unworldly, you should know that some people are beginning to talk of a "cashless economy" in this century.)
|
Prevent undue litigation and is enforceable
: A contract provision that sets out what the damages will be in the case of breach in order to limit damages and prevent undue litigation and is enforceable if the agreed damages do not amount to a penalty or are otherwise not unconscionable is called..
|
Provide a more complete understanding of the term
: Provide a more complete understanding of the term. Offer a wide range of social, political, ethical, and business issues and how they impact or are impacted by the selected core topic.
|
Have you ever received difficult or painful feedback
: Have you ever received difficult or painful feedback? How was it presented? How did the presentation of the feedback affect your understanding and internalization of it? Provide a few examples.
|
Compute cholatis branch profits tax
: Compute Cholati's branch profits tax, and - Determine its branch interest withholding tax obligations. Assume that Cholati does not reside in a treaty country.
|
Write a brief description of the study and outcomes
: Provide the article title, author, and publication in APA Style. Write a brief description of the study and outcome with a minimum of 500 words up to 750 words.
|
Allocate net income to partners based on partnership terms
: Allocate the net income to partners based on the above partnership terms and prepare allocation journal entries
|
Paper comparing provisions in u.s. constitution and articles
: Prepare a 2 page paper comparing three similar provisions in the U.S. Constitution and the Articles of Confederation. Discuss how these provisions have served to make the federal government more or less responsive to the needs of the people.
|
Issues regarding supply chain management
: What are the current information issues regarding Supply Chain Management? How can accurate information help suppliers and purchasers save money, and how does just-in-time delivery work? How does RFID fit into the picture?
|