McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 66

Waco Leather, Inc. a U..corporation, reported total taxable income of $5 million in 2011.Taxable income included 1. million of foreign source taxable income from the company's branch operations in Mexico.All of the branch income is general category income.Waco paid Mexican income taxes of $420,000 on its branch income.Compute Waco's allowable foreign tax credit for 2011.Assume a U..corporate tax rate of 34%.