Determine the amount of income taxable in the united states

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Question: Mama Corporation (a U.S. taxpayer) has a wholly owned sales subsidiary in the Bahamas (Bahamamama Ltd.) that purchases finished goods from its U.S. parent and sells those goods to customers throughout the Caribbean basin. In the most recent year, Bahamamama generated income of $100,000 and distributed 50 percent of that amount to Mama Corporation as a dividend. There are no income or withholding taxes in the Bahamas.

Required: a. Determine the amount of income taxable in the United States assuming that Bahamamama makes 20 percent of its sales in the Bahamas and 80 percent in other countries.

b. Determine the amount of income taxable in the United States assuming that Bahamamama makes 40 percent of its sales in the Bahamas and 60 percent in other countries.

Reference no: EM131705622

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