If a US Firm Creates a Foreign Subsidiary Corporation, It

question 49

Multiple Choice

If a U.S. firm creates a foreign subsidiary corporation, it:

• A) fully subjects it to income taxation in the foreign country.
• B) fully avoids taxation in the United States on income repatriated from the foreign subsidiary.
• C) will significantly reduce its taxable income.
• D) none of the above.

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Definitions:

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Consumer Surplus

The imbalance between the total budget consumers are willing to allocate for a product or service and the actual spending.

Consumer Surplus

The separation between the ideal amount consumers are willing to spend on a service or product and their real expenditures.

Producer Surplus

The discrepancy between what producers are ready to take for a product or service and the real amount they get.