A U.S.corporation established a 100 percent owned business in Germany.The U.S.corporation has U.S.source income in the current year of $300,000.The German business reports the following information for the current year: German-source net income $\quad$$\$ 200,000$
German income $\operatorname { tax }\quad\quad ( 80,000 )$
Net income after taxes$\quad$ $\$ 120,000$
Cash remitted to U.S. owner$\quad$ $\$ 30,000$
German withholding $\operatorname { tax } \quad ( 3,000 )$
Cash received by U.S. owner $\quad \$ 27,000$ Assume the business is a foreign corporation.For simplicity, assume the U.S.Federal income tax for the U.S.corporation on its worldwide income is $119,000.The U.S.corporation's foreign tax credit carryover for the current year (rounded to the nearest $100) is

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The foreign tax credit carryover is the amount of foreign income taxes paid ($80,000 German income tax + $3,000 German withholding tax = $83,000) minus the U.S. tax liability on worldwide income ($119,000), considering only the foreign source income portion. Since the U.S. corporation's worldwide income includes both U.S. source income ($300,000) and German source income ($200,000), the foreign source income portion of the U.S. tax liability is calculated based on the ratio of foreign source income to total worldwide income. The foreign source income portion of the U.S. tax liability is ($200,000 / $500,000) * $119,000 = $47,600. The foreign tax credit available is limited to this amount, so the corporation can use $47,600 of the $83,000 paid. The carryover is the excess of taxes paid over the limit that can be used in the current year, which is $83,000 - $47,600 = $35,400. However, since the correct answer is not listed among the provided options and my calculation does not match the options given, there seems to be a misunderstanding in my explanation regarding the calculation of the foreign tax credit carryover. The correct approach should involve understanding the limits on the foreign tax credit based on the taxes paid and income earned, and how these figures interact with U.S. tax obligations.

A USCorporation Established a 100 Percent Owned Business in Germany \quad

A USCorporation Established a 100 Percent Owned Business in Germany $\quad$