Silverado Corporation Is a 100 Percent Owned Mexican Subsidiary of Gold

Multiple Choice

Silverado Corporation is a 100 percent owned Mexican subsidiary of Gold NuggetCorporation, a U.S. corporation. Silverado had post-1986 earnings and profits of350,000,000 pesos and post-1986 foreign taxes of $15,000,000. During the current year, Silverado paid a dividend of 70,000,000 pesos to Gold Nugget. Assume an exchange rate of 1 peso = 0.10 dollars. Compute the tax consequences to Gold Nugget as a result ofthis dividend.

A) Taxable income of $7,000,000 and a deemed paid credit of $1,500,000.
B) Taxable income of $10,000,000 and a deemed paid credit of $1,500,000.
C) Taxable income of $10,000,000 and a deemed paid credit of 3,000,000.
D) Taxable income of $7,000,000 and a deemed paid credit of $3,000,000.