Amount Of Direct And Deemed Direct Tax Credit 542243

Assume that a US company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withhholding tax rate on dividends is 5 percent. If the subsidiary declares a 100% dividend, what is the amount of its direct and deemed direct tax credit?

a.$40,000

b.$3,000

c.$43,000

d.$34,000