Performance,Inc.,a U.S.corporation,owns 100% of Krumb,Ltd.,a foreign corporation.Krumb earns only general limitation income.During the current year,Krumb paid Performance a $200,000 dividend.The § 902 credit associated with this dividend is $30,000.The foreign jurisdiction requires a withholding tax of 30%,so Performance received only $140,000 in cash as a result of the dividend.What is Performance's total U.S.gross income reported as a result of the $140,000 cash dividend received?

Question

Quizplus · Accepted Answer

The gross dividend income is before the withholding tax ($60,000)and after the gross-up (add back)of the § 902 credit.Thus,the gross income is $200,000 plus $30,000,or $230,000.