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Joltco, a domestic corporation, manufactures batte...




Joltco, a domestic corporation, manufactures batteries for sale in the United States and abroad. Joltco markets its batteries in Europe through its wholly owned foreign marketing subsidiary, Jolti. Jolti was organized in Year 1, and its functional currency is the pound (?). Jolti?s tax attributes for its first two years of operations are as follows: Year 1 Year 2 Taxable income ?100 million None Foreign income taxes (paid at end of year) ?20 million None Net Subpart F income (included in ?100 million) ?40 million None Actual dividend distributions (paid at end of year) None ?8 million The pound had an average value of $1.50 during Year 1, $1.65 during Year 2, and was worth $1.60 at the end of Year 1, and $1.70 at the end of Year 2. What are the U.S. tax consequences of Jolti?s results from operations in Year 1 and Year 2? Assume that the dividend distribution in Year 2 was not subject to foreign withholding taxes.


Paper#12869 | Written in 18-Jul-2015

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