Quality Corporation Created a Foreign Subsidiary in Country C This

question 67

Essay

Quality Corporation created a foreign subsidiary in Country C this year. The subsidiary receives components from Quality, assembles the components into a finished product using local labor, and sells them to unrelated wholesalers in Countries A, B, and C using its own sales force. The foreign subsidiary has paid no dividends to the parent this year. What tax issues should Quality's Director of Taxes consider with respect to these activities?

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Definitions:

Note Collected

Refers to the receipt or collection of the amount due from a note receivable.

NSF Check

A check that has been returned by a bank because of insufficient funds in the account to cover the amount written on the check.

Outstanding Checks

Checks that have been issued and recorded by an entity but have not yet been cashed or cleared by the bank.

Petty Cash Fund

A small amount of cash kept on hand for minor or incidental expenses.