Mega, Inc., a U.S. multinational, has pretax U.S. source income and foreign source income as follows: $\begin{array}{lr}
\text {U. S. source income }&\$760,000\
\text { Foreign source income-Country $ M $}&80,000\
\text {Total }&\$840,000\
\end{array}$
Mega paid $15,000 income tax to Country M. Assume Mega's foreign source income does not qualify as foreign-derived intangible income. Mega has a $25,000 foreign tax credit carryforward. What is Mega's U.S. tax liability if it takes the foreign tax credit?

Question

Mega, Inc., a U.S. multinational, has pretax U.S. source income and foreign source income as follows: $\begin{array}{lr}
\text {U. S. source income }&\$760,000\
\text { Foreign source income-Country $ M $}&80,000\
\text {Total }&\$840,000\
\end{array}$
 Mega paid $15,000 income tax to Country M. Assume Mega's foreign source income does not qualify as foreign-derived intangible income. Mega has a $25,000 foreign tax credit carryforward. What is Mega's U.S. tax liability if it takes the foreign tax credit?

Quizplus · Accepted Answer

The Answer of Mega, Inc., a U.S. multinational, has pretax U.S. source income and foreign source income as follows: $\begin{array}{lr}
\text {U. S. source income }&\$760,000\
\text { Foreign source income-Country $ M $}&80,000\
\text {Total }&\$840,000\
\end{array}$
 Mega paid $15,000 income tax to Country M. Assume Mega's foreign source income does not qualify as foreign-derived intangible income. Mega has a $25,000 foreign tax credit carryforward. What is Mega's U.S. tax liability if it takes the foreign tax credit?

Mega, Inc, a U Mega Paid $15,000 Income Tax to Country M