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Cholati is a foreign corporation




Question;Cholati is a foreign corporation that produces fi ne chocolates for sale worldwide. Cholatimarkets it chocolates in the United States through a branch sales offi ce located in New York City. During the current year, Cholati?s effectively connected earnings and profi ts are $3million, and its U.S. net equity is $6 million at the beginning of the year, and $4 million atthe end of the year. In addition, a review of Cholati?s interest expense account indicatesthat it paid $440,000 of portfolio interest to an unrelated foreign corporation, $200,000of interest to a foreign corporation which owns 15% of the combined voting power ofCholati?s stock, and $160,000 of interest to a domestic corporation.Compute Cholati?s branch profi ts tax, and determine its branch interest withholding taxobligations. Assume that Cholati does not reside in a treaty country.


Paper#41445 | Written in 18-Jul-2015

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