Many Mountains, Inc. is a U.S. multinational corporation. This year, it had the following income.
Corporate tax rate schedule.
Many Mountains paid $15,000 income tax to Country X and $18,500 income tax to Country Y. Compute Many Mountains' allowable foreign tax credit.

Question

Quizplus · Accepted Answer

U.S. tax before FTC = $750,000 × 21% = $157,500. FTC Limit = $157,500 × 170/750 = $35,700; Total creditable foreign taxes = $33,500 ($15,000 + $18,500). Credit = Lesser of $33,500 or $35,700.
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