Jaime received gross foreign-source dividend income of $250,000. Foreign taxes withheld on the dividend were
$25,000. Jaime's total U.S. tax liability is $840,000 (the 21% tax rate applies). Jaime's current-year FTC is $52,500.

Question

Quizplus · Accepted Answer

Jaime's Foreign Tax Credit (FTC) cannot exceed the amount of U.S. tax liability attributable to foreign-source income. In this case, the calculation for the maximum FTC would involve determining the portion of the U.S. tax liability that corresponds to the foreign-source income, not the $52,500 figure provided.

Jaime Received Gross Foreign-Source Dividend Income of $250,000