Luther Industries,a U

question 24

Essay

Luther Industries,a U.S.firm.has a subsidiary in the United Kingdom.This year,the subsidiary reported and repatriated earnings before interest and taxes (EBIT)of £45 million.The current exchange rate is $1.86/£.The tax rate in the U.K.for this activity is 28%.Under U.S.tax codes,Luther is facing a 35% corporate tax rate on their earnings.What is Luther's U.S.tax liability on its U.K.subsidiary?

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Definitions:

Ethnic Group

A community or population made up of people who share a common cultural background or descent.

Binge Drinking

The consumption of an excessive amount of alcohol in a short period, leading to acute intoxication.

18th Amendment

An addition to the United States Constitution that prohibited the manufacture, sale, or transportation of alcoholic beverages, later repealed by the 21st Amendment.

21st Amendment

The constitutional amendment that repealed Prohibition in the United States, allowing for the legal manufacture, sale, and transportation of alcohol.