Silverado Corporation Is a 100 Percent Owned Mexican Subsidiary of Gold

question 100

Multiple Choice

Silverado Corporation is a 100 percent owned Mexican subsidiary of Gold Nugget Corporation,a U.S.corporation.Silverado had post-1986 earnings and profits of 350,000,000 pesos and post-1986 foreign taxes of $15,000,000.During the current year,Silverado paid a dividend of 70,000,000 pesos to Gold Nugget.Assume an exchange rate of 1 peso = 0.10 dollars.Compute the tax consequences to Gold Nugget as a result of this dividend.

• A) Taxable income of $7,000,000 and a deemed paid credit of $3,000,000.
• B) Taxable income of $10,000,000 and a deemed paid credit of 3,000,000.
• C) Taxable income of $7,000,000 and a deemed paid credit of $1,500,000.
• D) Taxable income of $10,000,000 and a deemed paid credit of $1,500,000.

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