Respuesta :
Answer:
Total Income $5.4 million of branch profits.................5,400,000
Spartania tax at 15 percent..................................................810,000
United States tax at 21 percent.........................................1,134,000
Total Tax (810,000+1,134,000)...........................................1,944,000
Explanation:
Since Spartan Corporation, is a U.S. corporation, and has reported $5.4 million of pretax income from its business operations in Spartania; If Spartania taxes branch income at 15 percent, and the United States taxes corporate income at 21 percent. and there is no mechanism for mitigating double taxation, then the total tax (U.S. and foreign) on the total income would be an addition of both taxes.
Total Income $5.4 million of branch profits.................5,400,000
Spartania tax at 15 percent..................................................810,000
United States tax at 21 percent.........................................1,134,000
Total Tax (810,000+1,134,000)...........................................1,944,000
In the event of a bilateral tax agreement or tax treaty, an arrangement between two countries which avoids the problem of double taxation, could have allowed Spartan to pay only a total of 21% which is the U.S. Tax rate
