Use the following information to answer the question(s)below.
Incorporated Tool,a U.S.firm,is considering its international tax situation.The corporate tax rate in the United States is currently 21%.Incorporated Tool has major operations in Ireland,where the tax rate is 12.5%,Japan where the tax rate is 40.7%,and Mexico,where the tax rate is 30.0%.Incorporated Tool's profits,which are fully and immediately repatriated,and foreign taxes paid for the current year are as follows:
-Assuming that the Japanese and Mexican subsidiaries did not exist,the U.S.tax liability on the Irish subsidiary would be closest to:

Question

Use the following information to answer the question(s)below.
Incorporated Tool,a U.S.firm,is considering its international tax situation.The corporate tax rate in the United States is currently 21%.Incorporated Tool has major operations in Ireland,where the tax rate is 12.5%,Japan where the tax rate is 40.7%,and Mexico,where the tax rate is 30.0%.Incorporated Tool's profits,which are fully and immediately repatriated,and foreign taxes paid for the current year are as follows: 
-Assuming that the Japanese and Mexican subsidiaries did not exist,the U.S.tax liability on the Irish subsidiary would be closest to:

Quizplus · Accepted Answer

The U.S. tax liability on the Irish subsidiary would be closest to $34 million if the Japanese and Mexican subsidiaries did not exist. This is because the Irish subsidiary would be the only foreign subsidiary, and its income would be taxed at the U.S. corporate tax rate of 35%.

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