A U.S.-based corporation has $8,000 in total foreign tax credits (FTC) on a consolidated basis. The firm's overall FTC limitation is $5,000. What is the firm's U.S. tax liability or excess FTC?

Question

Quizplus · Accepted Answer

The firm has $3,000 in excess FTCs because it has $8,000 in total foreign tax credits but can only use $5,000 of them due to the FTC limitation. The excess $3,000 can be carried back or forward to other tax years.

A US-Based Corporation Has $8,000 in Total Foreign Tax Credits (FTC)