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  3. hank is a u.s. citizen (i.e., a u.s. person), who

Hank is a U.S. citizen (i.e., a U.S. person), who owns 100% of a domestic...

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Accounting

Hank is a U.S. citizen (i.e., a U.S. person), who owns 100% of a domestic S-Corporation which, in turn, owns 100% of the stock of Cheers Ltd., a foreign corporation. Although Cheers Ltd. has accumulated significant earnings and profits (E&P) since its inception in early 2018, including current year E&P of $1,000,000, it has never paid a dividend and none of its income has been subject to the U.S. anti-deferral rules. Furthermore, assume that Hank is in a 37% individual income tax bracket in the United States.
a) What is Hank's current year U.S. income tax liability related to Cheers Ltd.?
b) What is Hank's current year U.S. income tax liability related to Cheers Ltd. if Cheers Ltd. distributes a $500,000 dividend and Cheers Ltd. resides in a foreign country that has a comprehensive income tax treaty with the United Sates?
c) What if Cheers Ltd. does not reside in a foreign country that has a comprehensive income tax treaty with the United States?

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