11. Molly, Inc. a domestic corporation, owns 15% of PJ. Inc. and 12% of Emma, Inc., both foreign corporations. Molly is paid gross dividends of $35,000 and $18,000 from PJ and Emma, respectively. PJ withheld and paid more than $10,500 in foreign taxes on the $35,000 dividend. PJ's country of residence levies a 20% tax on dividends paid to nonresident corporations. However, the tax rate is increased to 30% if the recipient is a resident of a country that provides a FTC. Taxes of $3,600 were withheld on the dividend from Emma. What tax issues must be considered in determining the availability and amount of the FTC allowed to Molly, Inc.?

Question

11. Molly, Inc. a domestic corporation, owns 15% of PJ. Inc. and 12% of Emma, Inc., both foreign corporations.  Molly is paid gross dividends of $35,000 and $18,000 from PJ and Emma, respectively.  PJ withheld and paid more than $10,500 in foreign taxes on the $35,000 dividend.  PJ's country of residence levies a 20% tax on dividends paid to nonresident corporations.  However, the tax rate is increased to 30% if the recipient is a resident of a country that provides a FTC.  Taxes of $3,600 were withheld on the dividend from Emma.  What tax issues must be considered in determining the availability and amount of the FTC allowed to Molly, Inc.?