Fulton,Ltd.,a foreign corporation,operates a U.S.branch that reports effectively connected U.S.earnings and profits (after income taxes) of $800,000 for the tax year.The branch's U.S.net equity at the beginning of the tax year is $2 million and at the end of the tax year is $1.5 million.Fulton is organized in a nontreaty country.Fulton's dividend equivalent amount for the year is:

Question

Quizplus · Accepted Answer

The dividend equivalent amount is the lesser of the branch's effectively connected earnings and profits ($800,000) or the increase in the branch's U.S. net equity ($500,000).