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    U.S. Tax Consequences of Filigree's 2003 Activity

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    Filigree Inc., a foreign corporation, is a wholly owned subsidiary of Gold Corporation, a U.S. corporation. Filigree's 2003 taxable income of $1 million included $300,000 of Subpart F income. Filigree paid $270,000 of foreign income tax and made no distributions to Gold during 2003. Gold's separate company 2003 taxable income was $2 million, all of which was U.S. source.

    a. What are the U.S. tax consequences of Filigree's 2003 activity?
    b. Calculate Gold's 2003 taxable income, allowable foreign tax credit, and net U.S.
    tax liability.

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    Solution Preview

    (a) A United States shareholder of a CFC (controlled foreign corporation) is required to include in gross income each year its pro rata share of the subpart F income of the CFC for the taxable year of the CFC which ends ...

    Solution Summary

    155 words explain the tax consequences and Gold's taxable income as a result of Filigree's 2003 activity.