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Chapter 10 - Application Problem 8

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This file contains a formatted MS Excel file containing the answers to Advanced Tax Accounting - Chapter 10 - Application Problem 8

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This file contains a formatted MS Excel file containing the answers to Advanced Tax Accounting - Chapter 10 - Application Problem 8

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Chapter 10 - Application Problem 8

Valencia Corporation, a U.S. corporation, has 2003 taxable income from U.S. sources of $300,000 and from foreign sources of $120,000 before considering the impact of foreign taxes. It paid $20,000 of foreign taxes during 2003.

a). If Valencia's foreign taxes are not creditable, calculate its U.S. tax liability for 2003.

If Valencia's foreign taxes are not creditable, but deductible, then the company's U.S. taxable income is:

U.S. taxable income = $300,000 + $120,000 - $20,000 = $400,000

According to the IRS's Corporate Income Tax Rate Table below, the applicable taxation rate is 34%. Multiplying the U.S. taxable income ...

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