A firm that earns $1 million before tax in Brazil pays Brazilian tax of $250,000 and remits the remaining $750,000 as a dividend to its U.S. parent. It pays a 5% dividend withholding tax on its remittance. Assuming a US tax rate of 35%, the parent will owe U.S. tax on this dividend of
$25,000
$52,500
$62,500
Nothing. It will also receive a foreign tax credit of $90,000.