USAco expands its manufacturing operations to foreign country F.
In year 1, the foreign manufacturing operations earn $400,000 and in year 2, the foreign operations lose $400,000. USAco does not repatriate any of the earnings.
Discuss the amount of Income or loss that USAco would have to report on its Form 1120 for each year under the following two alternative options:
(a) USAco operates in country F as a branch, or (b) USAco operates in country F as a subsidiary