Jilt, a non-U.S. corporation, not resident in a treaty country, operates a U.S. branch that earns effectively connected E & P of $4 million for the tax year. The branch increases its investments in U.S. property (its U.S. net equity) by $1,600,000 . The branch pays a U.S. corporate income tax of $2,153,846 . Jilt's branch profits tax is:
a. $720,000.
b. $1,200,000.
c. $2,153,846.
d. $2,873,846.
a
RATIONALE: 30% × ($4,000,000 – $1,600,000). E & P is already after tax.
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