Multiple Choice
Madrid Corporation is a 100 percent owned Spanish subsidiary of DoubloonCorporation, a U.S. corporation. Madrid had post-1986 earnings and profits of€4,200,000 and post-1986 foreign taxes of $2,700,000. During the current year, Madrid paid a dividend of €2,100,000 to Doubloon. Assume an exchange rate of €1 = $1.50. Compute the tax consequences to Doubloon as a result of this dividend.
A) Taxable income of $3,150,000 and a deemed paid credit of $2,700,000.
B) Taxable income of $3,150,000 and a deemed paid credit of $1,350,000.
C) Taxable income of $4,500,000 and a deemed paid credit of $2,700,000.
D) Taxable income of $4,500,000 and a deemed paid credit of $1,350,000.
Correct Answer:
Verified
Correct Answer:
Verified
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