Assume That U

question 35

Multiple Choice

Assume that U.S.MNE A earns $100,000 of foreign source income, that the tax rate in the foreign country is 40 percent, and that the tax rate in the United States is 35 percent.How much total (both domestic and foreign) tax would the company pay on that foreign source income, assuming that the tax credit principle applies?

• A)$40,000
• B)$35,000
• C)$75,000
• D)$5,000

---

Definitions:

Mitigate Damages

The legal requirement or effort to minimize the harm or loss suffered as a result of a breach of contract or other wrongdoing.

Non-Disclosure Agreement

A legal contract between at least two parties that outlines confidential material, knowledge, or information that parties wish to share with one another for certain purposes but wish to restrict access to or by third parties.

Proprietary Recipe

A confidential formulation owned by an individual or a company, protected as a trade secret, which gives a unique identity to a product.

Specific Performance

A legal remedy requiring a party to fulfill their obligations under a contract, typically used when monetary damages are inadequate compensation.