Provo Corporation Received a Dividend of $350,000 from Its 100

Multiple Choice

Provo Corporation received a dividend of $350,000 from its 100 percent owned German subsidiary.A deemed paid credit of $150,000 was available on the dividend.No withholding tax was imposed on the dividend.What are the U.S.tax consequences to Provo on receipt of the dividend,assuming the foreign tax credit limitation is not binding and the company breaks even on its U.S.operations? Assume a U.S.tax rate of 34 percent.

A) Taxable income of $350,000 and a net U.S. tax liability of $0.
B) Taxable income of $350,000 and a net U.S. tax liability of $20,000.
C) Taxable income of $500,000 and a net U.S. tax liability of $170,000.
D) Taxable income of $500,000 and a net U.S. tax liability of $20,000.