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Maxwell, U.S. company owns 100% of the stock of CFC 1 which in turn owns...

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Accounting

Maxwell, U.S. company owns 100% of the stock of CFC 1 which in turn owns 100% of the stock of CFC

CFC 2 has earnings and profits of $200,000 (before deducting foregin taxes), has paid foregin taxes of $60,000 and distributes a dividend of $70,000 to CFC 1.

CFC 1 has earnings and profits of $800,000 (before deducting taxes), has paid foregin taxes of $200,000 and distributes a dividend of $500,000 to Maxwell, US.

What is amount of the gross up dividend received by Maxwell? What is the US tax on the dividend and how much Foregin Tax Credit may Maxwell taek? Assume 21% tax rate.

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