Use the information to answer the following question(s).
Green Valley Exporters USA has $100,000 of before-tax foreign income. The host country has a corporate income tax rate of 25% and the U.S. has a corporate income tax rate of 35%.
-Refer to Instruction 15.2. If the U.S. has no bilateral trade agreement with the host country, what is the total amount of income taxes Green Valley Exporters will pay?
A) $25,000
B) $35,000
C) $51,250
D) $60,000

Question

Quizplus · Accepted Answer

Green Valley Exporters USA will pay a total of $51,250 in income taxes. First, they will pay 25% of their foreign income ($25,000) to the host country as corporate income tax. Then, they will pay 35% of their remaining foreign income ($52,500) as U.S. corporate income tax, which amounts to $18,375. Adding these two taxes together, the total amount of income taxes Green Valley Exporters will pay is $25,000 + $18,375 = $51,250.

Use the Information to Answer the Following Question(s)