Yankee CHips co. a US based company establishes an operation in England in Jan of Year 1 when the exchange rate is US$1.50 per British pound. During the year 1 the british branch generates 5,000,000 pounds of pretax income. On Oct 15th, Year 1 2,000,000 Pounds is repatriated to Yankee and converted into US dollars. Assume the effective income tax rate in England is 30%. Taxes were paid in England on Dec 31, Year 1. Relevent exchange rates for year 1 are provided in US $ per Pound ..
Jan 1 1.50
Average 30 1.45
October 15 1.35
Dec 31 1.30

Assume a US tax rate of 35%

Question 1. Assume the Yankee operation in England is registered with the English governemtn as a branch.
Requirement: Determine the amount of U.S. taxable income, US foreign tax credit, and US tax liability related to England's branch (in US dollars.)

Question 2. Assume that Yankee operations in Englan is incorporated as a subsidiary.
Requirement: Determine the amount of US taxable income, US foreign tax xredit and net US tax liability related to the English subsidiary ( In US Dollars) ..