Bacon Signs Inc

question 3

Multiple Choice

Bacon Signs Inc. is based in a country with a territorial approach to taxation but generates 100% of its income in a country with a worldwide approach to taxation. The tax rate in the country of incorporation is 25%, and the tax rate in the country where they earn their income is 50%. In theory, and barring any special provisions in the tax codes of either country, Bacon should pay taxes at a rate of ________ in the country of incorporation.

• A) 75%.
• B) 62.5%.
• C) 0%.
• D) 50%.