Suppose that a 100% payout subsidiary operates in a foreign country with a corporate tax rate of 42% and a withholding tax on dividends of 5%. If the subsidiary has generated a taxable income of $10,000 in the foreign country, and the US corporate tax rate is 34%, how much is the excess tax credit if the dividends are repatriated back to the US? Show all calculations.
a.12.9%
b. 32.5%
c. 10.9%
d. 30.5%