Without the foreign tax credit, double taxation would result when:

Question

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Without the foreign tax credit, a U.S. resident would face double taxation when both the United States and a foreign country tax the same foreign-source income. The foreign tax credit allows taxpayers to offset U.S. tax liability for foreign income by claiming a credit for taxes paid to a foreign government on that income, reducing the risk of double taxation. Options A and B do not necessarily result in double taxation because they involve taxation of income within one jurisdiction. Option D is not relevant to the question of double taxation.

Without the Foreign Tax Credit, Double Taxation Would Result When