Jackie Corp. is included in the list of top withholding agents. During the month, it paid out the following:Cash dividends to resident individual shareholders - 200,000Prize on competitions won by a resident alien - 5,000Local purchases of services related to the operations - 600,000Purchase of mineral products - 800,000Winnings on a raffle promo conducted - 20,000Lease payment to a vessel owned by a non-resident - 60,000How much of the withholdings can be used as tax credits of the applicable payees? 54,70046,00052,00048,700

Answered: Jackie Corp. is included in the list of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Jackie Corp. is included in the list of top withholding agents. During the month, it paid out the following:

Cash dividends to resident individual shareholders - 200,000
Prize on competitions won by a resident alien - 5,000
Local purchases of services related to the operations - 600,000
Purchase of mineral products - 800,000
Winnings on a raffle promo conducted - 20,000
Lease payment to a vessel owned by a non-resident - 60,000

How much of the withholdings can be used as tax credits of the applicable payees?

54,700

46,000

52,000

48,700

Expert Solution

Step 1

Tax credits is an amount of money that taxpayers can subtract directly from the taxes owned by them. Basically, tax credit is a dollar-for-dollar reduction of the income tax burden owned by you.

If income has been earned outside the country and a tax paid on it in that country, then a tax credit can be claimed in India.

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