Problem 24-55 (LO 24-4) [The following information applies to the questions displayed below.]...
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Accounting
Problem 24-55 (LO 24-4)
[The following information applies to the questions displayed below.] Sombrero Corporation, a U.S. corporation, operates through a branch in Espania. Management projects that the companys pretax income in the next taxable year will be $133,000, $108,000 from U.S. operations and $25,000 from the Espania branch. Espania taxes corporate income at a rate of 45 percent. The U.S. corporate tax rate is 35 percent. (Do not round intermediate calculations.)
a. If managements projections are accurate, what will be Sombreros excess foreign tax credit in the next taxable year? Assume all of the income is general category income.
Excess foreign tax credit
b. Management plans to establish a second branch in Italia. Italia taxes corporate income at a rate of 30 percent. What amount of income will the branch in Italia have to generate to eliminate the excess credit generated by the branch in Espania?
Income
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