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Short Answer Questions
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1
L&M Limited is considering a domestic expansion but is unsure whether to use a divisional structure or create a subsidiary corporation. Explain to the shareholder of L&M the difference between these two structures with respect to loss utilization.
2
Suresh owns a corporation, and is considering an expansion into the United States (U.S.). He is not sure whether he should set up a branch office in the U.S. or simply sell his products directly to the US from Canada. He reasons that, either way, the income would remain in his corporation so there are no tax differences. Is Suresh correct? If not, what are the differences between the two options from a tax perspective?
3
Referring to the previous question, if Suresh decides to open a foreign subsidiary in the U.S., what effect would that have on corporate taxes?





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