Polka Corporation Is a 100 Percent Owned Poland Subsidiary of Pierogi

Essay

Polka Corporation is a 100 percent owned Poland subsidiary of Pierogi Inc., a U.S. corporation. During the current year, Polka paid a dividend of €525,000 to Pierogi. The dividend was subject to a withholding tax of €26,250. Assume an exchange rate of €1 = $1.50. Pierogi reported U.S. taxable income of $1,000,000. Compute Pierogi's net U.S. tax liability for the current year and excess FTC, if any.