Pennworth Corporation operates in the United States and foreign country M. Its domestic subsidiary Delco, Inc. operates in foreign country N. This year, the two corporations report the following.
Corporate tax rate schedule
If Pennworth and Delco file a consolidated U.S. tax return, compute consolidated income tax liability.

Question

Quizplus · Accepted Answer

Taxable income = $5,000,000. Tax before credits = $1,050,000. FTC = $400,000 (no limit because of cross-crediting).
 $$\begin{array} { l r r l } 
& & \text { Foreign } & \text { Foreign } \
& \text { U.S. Source } & \text { Source } & \text { Income } \
& \text { Income } & \text { Income } & \text { Tax Paid } \
\text { Pennworth } & \$ 3,000,000 & \$ 1,000,000 & \$ 300,000 \
\text { Delco } & 0 & 1,000,000 & 100,000
\end{array}$$

Pennworth Corporation Operates in the United States and Foreign Country