Emerald Corporation Is a 100 Percent Owned Irish Subsidiary of Shamrock,Inc.,a

Short Answer

Emerald Corporation is a 100 percent owned Irish subsidiary of Shamrock,Inc.,a U.S.corporation.Emerald had post-1986 earnings and profits of €2,625,000 and post-1986 foreign taxes of $525,000.During the current year,Emerald paid a dividend of €525,000 to Shamrock.The dividend was characterized as general category income for FTC purposes.The dividend was subject to a withholding tax of €26,250.Assume an exchange rate of €1 = $1.50.Shamrock reported U.S.taxable income of $1,000,000.Shamrock's U.S.tax rate is 34 percent.Compute Shamrock's net U.S.tax liability for the current year and excess FTC,if any.