Use the Information to Answer the Following Question(s)

question 27

Multiple Choice

Use the information to answer the following question(s) .
Green Valley Exporters USA has $100,000 of before tax foreign income. The host country has a corporate income tax rate of 25% and the U.S. has a corporate income tax rate of 35%.
-Refer to Instruction 15.1.If the U.S.has a bilateral trade agreement with the host country that calls for the total tax paid to be equal to the maximum amount that could be paid in the highest taxing country,what is the total amount of income taxes Green Valley Exporters will pay to the host country,and how much will they pay in U.S income taxes on the foreign earned income?

• A) $25,000; $10,000
• B) $25,000; $26,250
• C) $35,000; $0
• D) none of the above

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Definitions:

Cartel

A formal agreement among competing firms in an industry to control prices, limit output, or divide markets.

Total Industry Output

The aggregate production of goods and services in a specific industry within a given period.

Marginal Cost

The cost of producing one additional unit of a good or service, reflecting changes in variable costs.

Cartel

An agreement among competing businesses to control prices or exclude entry of a new competitor in the market, aiming at maximizing their profits collectively.