TAX 9869 Lecture Notes - Lecture 34: Withholding Tax, Tax Rate, Foreign Tax Credit

6 views8 pages
17 Jul 2020
Department
Course
Professor
Example 1:
A. Is this creditable?
1. Honduran real property tax: NO
2. VAT: not a creditable tax
3. Federal income tax on biz income: yes
4. State income tax: yes
a. Its an income tax
5. Withholding tax: yes
6. Social security tax on earnings: maybe?
. Maybe its creditable
a. Cant say for sure
b. One court case said it wasn't creditable
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 8 pages and 3 million more documents.

Already have an account? Log in
c. Some said it is on income
B. No, you cannot credit some and deduct some
But taxes that aren't creditable; you can deduct
VAT + real property tax are deductible!
Creditable taxes you have a choice
Credit for Income tax and deduction for property + VAT
Example 2:
Sole prop = she has a biz
100,000 of TI from Columbia
150,000 of TI from US
50,000 of canadian sourced interest income (reduced tax rate of 5%)
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 8 pages and 3 million more documents.

Already have an account? Log in
Effective tax rate
Worldwide TI of 300,000
Domestic liab = 105,000
What is her ETR?
105,000/300,000=35%
Pretend no baskets: figure out what FTC is
100k columbia = FSI
45k = tax
50k canada = FSI
2500 = tax
FSI in total - 150k* 35%=52500
If no such thing as baskets; how much FTC am i allowed to
take? 52500
How much foreign tax paid in total = 47,500
How much maximum can she take? (cannot take more than
what you paid!)
Allowed 52,500 but paid 47,400 so FTC would be 47,500
Without baskets = 47,500
How much would Jennifer pay the IRS? 105,000 - 47,500=
57,500 [$105,000= her domestic tax liability]
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 8 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Notes+

Unlimited access to class notes and textbook notes.

YearlyBest Value
75% OFF
$8 USD/m
Monthly
$30 USD/m
You will be charged $96 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.