Usaco a domestic corporation is the wholly-owned us

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USAco, a domestic corporation, is the wholly-owned U.S. subsidiary of FORco, a foreign corporation. The U.S.-Country F tax treaty exempts interest payments from withholding taxes. USAco%u2019s financial statements appear as follows:

BALANCE SHEET

Assets Liabilities & Owners%u2019 Equity

Cash $100

Receivables $500

Notes Payable $400

Owner%u2019s Equity $200

INCOME STATEMENT

Gross Income $500

Administrative Expenses $350

Interest Expense $100

The interest expense of $100 arises from a notes payable from USAco to FORco.

What is the maximum amount of interest USAco may deduct on its U.S. return?

Reference no: EM13576085

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