Determine the amount of foreign tax credit eastwood

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Reference no: EM13971749

Eastwood Company (A US based company) has subsidiaries in three countries, X, Y and Z. All three subsidiaries manufacture and sell products in their host country. Corporate income tax rates in these three countries over the most recent three years period as follows:

2158_68-B-A-G-F-A (1514)-1.png

None of these countries imposes a withholding tax on dividends distributed to a foreign parent company. The US corporate income tax rate over this period was 35%.
Pretax income earned by each subsidiary and the percentage of after tax income paid to Eastwood over the most recent three year period are as follows:

946_68-B-A-G-F-A (1514)-2.png

Required:

A. Determine the amount of foreign source income Eastwood will include in the US tax return in each of the three years.

B. Determine the amount of foreign tax credit Eastwood will be allowed to take in determining its US tax liability in each of the three years.

C. Determine the amount of excess foreign tax credit, if any, Eastwood will have in each of the three years.

D. Determine Eastwood's net US tax liability in each of the three years.

Reference no: EM13971749

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