In the grossing up procedure, MNCs add the before-tax subsidiary income to their total taxable income, calculate the U.S. tax liability on the grossed -up income, and the related taxes are paid in the foreign country are applied as a credit against the additional U.S. tax liability.

Question

Quizplus · Accepted Answer

This is an accurate description of the grossing up procedure used by MNCs to calculate their U.S. tax liability on subsidiary income earned in foreign countries.

In the Grossing Up Procedure, MNCs Add the Before-Tax Subsidiary