Tenco a domestic corporation manufactures tennis rackets

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Tenco, a domestic corporation, manufactures tennis rackets for sale in the United States and abroad. Tenco owns 100% of the stock of Teny, a foreign marketing subsidiary that was organized in Year 1. During Year 1, Teny had $15 million of foreign-based company sales income, paid $3 million in foreign income taxes, and distributed no dividends. During Year 2, Teny had no earnings and profits, paid no foreign income taxes, and distributed a $12 million dividend.

Assuming the U.S. corporate tax rate is 35%, what are the U.S. tax consequences of Tenys Year 1 and Year 2 activities?

Reference no: EM13575195

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