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Can you explain your reasoning please FOR QUESTIONS 1, 2 AND 3: USco, a C corporation,...

Can you explain your reasoning please

FOR QUESTIONS 1, 2 AND 3: USco, a C corporation, makes a payment to is only shareholder, ForCo, a company that is incorporated in country F, which has a tax treaty with the United States similar to the U.S. Model Treaty of 2016. ForCo is wholly-owned by ForParent, a country F corporation whose shares are publicly traded on the NASDAQ system.

1) If the payment is a dividend, what is the correct withholding rate?

a.

15%

b.

30%

c.

5%

d.

0%

2) What is the correct withholding rate if the payment is a dividend, and ForCo only owns 5% of the stock of USCo?

a.

0%

b.

5%

c.

30%

d.

15%

3) If the payment is interest, what is the correct withholding rate?

a.

15%

b.

30%

c.

5%

d.

0%
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Answer #1

Nonresident aliens are subject to no U.S. capital gains tax, but capital gains taxes will likely be paid in your country of origin. Nonresident aliens are subject to a dividend tax rate of 30% on dividends paid out by U.S. companies

a) Withholding Rate = 30%

b) Withholding Rate = 30%

c) Withholding Rate = 30%

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