McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 22

Euro Corporation, a U..corporation, operates through a branch in Germany.During 2011 the branch reported taxable income of $1,000,000 and paid German income taxes of $300,000.In addition, Shamrock received $50,000 of dividends from its 5% investment in the stock of Maple Leaf Company, a Canadian corporation.The dividend was subject to a withholding tax of $5,000.Euro reported U..taxable income from its manufacturing operations of $950,000.Total taxable income was $2,000,000.Precredit U..taxes on the taxable income were $680,000.Included in the computation of Euro's taxable income were "definitely allocable" expenses of $500,000, 50% of which were related to the German branch taxable income.Complete pages 1 and 2 of Form 1118 for just the general category income reported by Euro.You can use the "fill-in" form available on the IRS website, http://www.rs.ov.