Axtell Corporation has the following taxable income: U.S. source income $ 1,620,000 Foreign source income: Country A 550,000 Country B 2,000,000 Country C 2,900,000 Taxable income $ 7,070,000 Axtell paid $600,000 income tax to Country B and $1.3 million income tax to Country C. Country A does not have a corporate income tax. Required: Compute Axtell’s U.S. income tax, assuming the foreign source income does not qualify as FDII.

Axtell Corporation has the following taxable income: U.S. source income $ 1,620,000 Foreign source income: Country A 550,000 Country B 2,000,000 Country C 2,900,000 Taxable income $ 7,070,000 Axtell paid $600,000 income tax to Country B and $1.3 million income tax to Country C. Country A does not have a corporate income tax. Required: Compute Axtell’s U.S. income tax, assuming the foreign source income does not qualify as FDII.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter16: Multijurisdictional Taxation

Section: Chapter Questions

Problem 18P

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U.S. source income	$ 1,620,000
Foreign source income:
Country A	550,000
Country B	2,000,000
Country C	2,900,000
Taxable income	$ 7,070,000

Required:

Compute Axtell’s U.S. income tax, assuming the foreign source income does not qualify as FDII.

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