Suppose that Ithaca Snowboards also sets up operations in a Japanese subsidiary. Assume that such operations will pay tax at a 45% Japanese tax rate and will generate an additional $80 million of income, all Japanese source. Assume that unlike the Liechtenstein subsidiary, the Japanese subsidiary repatriates none of its income.
What will be Ithaca Snowboards’ U.S. tax liability and its worldwide tax liability?
Continuing from part c, now assume that the Japanese subsidiary does repatriate all of its earnings each year.
What will be Ithaca Snowboards’ U.S. tax liability and worldwide tax liability?