Business, 17.06.2021 23:00 Kzamor

USAco is a wholly-owned U. S. subsidiary of ForCo, a foreign corporation. USAco's only assets are cash of $400,000, accounts receivable of $400,000, and its U. S. manufacturing plant with a value of $1 million. In addition, USAco has carried a mortgage on the manufacturing plant of $600,000 for the last 10 years. ForCo sells its shares to a buyer for $1,800,000. Which of the following best describes the tax implications? 1) The buyer does not have to withhold.
2) The buyer must withhold $180,000, since USAco is a U. S. Real Property Holding Corporation.
3) USAco cannot deduct any interest it pays.
4) The buyer must withhold $270,000, since USAco is a U. S. Real Property Holding Corporation.

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USAco is a wholly-owned U. S. subsidiary of ForCo, a foreign corporation. USAco's only assets are ca...

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