Cane Corporation owns 45% of the stock of Edmonton Airline Corporation.In its first year of operations,Edmonton Airline,a Canadian corporation,earns $400,000 of E&P and pays a $100,000 dividend to Cane Corporation.Edmonton Airline pays $50,000 in Canadian income taxes.All amounts are expressed in U.S.dollars.What is Cane Corporation's deemed paid foreign tax credit for the dividend?
A)$ 0
B)$12,500
C)$50,000
D)none of the above

Question

Quizplus · Accepted Answer

B)$50,000 × ($100,000/$400,000)= $12,500

Cane Corporation Owns 45% of the Stock of Edmonton Airline