Dark, Inc, a U

question 46

Multiple Choice

Dark, Inc., a U.S. corporation, operates Dunkel, an unincorporated branch manufacturing operation in Germany. Dark reports $100,000 of taxable income from Dunkel on its U.S. tax return along with $400,000 of taxable income from its U.S. operations. Dark paid $30,000 in German income taxes related to the $100,000 of Dunkel income. Assuming a U.S. tax rate of 21%, what is Dark's U.S. tax liability after any allowable foreign tax credits?

• A) $21,000
• B) $75,000
• C) $84,000
• D) $105,000

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Definitions:

Eurobonds

International bonds issued in a currency different from the currency of the country or market in which they are issued, allowing issuers to access capital outside their home markets.

International Bonds

Bonds issued in a country by a non-domestic entity, allowing the issuer to access foreign capital.

Uncovered Interest Parity

A financial theory that posits that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

Exchange Rate Risk

The potential for losses due to fluctuation in the exchange rate between two currencies in international transactions.