Jilt,a non-U.S.corporation,not resident in a treaty country,operates a U.S.branch that earns effectively connected E & P of $4 million for the tax year.The branch increases its investments in U.S.property (its U.S.net equity) by $1,600,000.The branch pays a U.S.corporate income tax of $2,153,846.Jilt's branch profits tax is:

Question

Quizplus · Accepted Answer

The branch profits tax is calculated as 30% of the effectively connected earnings and profits (E & P) reduced by the increase in U.S. net equity. Here, it is 30% of ($4,000,000 - $1,600,000) = $720,000.

Jilt,a Non-U