Arin and Bo have $74,000 total taxable income,which includes $13,500 of taxable income from France.They paid $1,600 in foreign income taxes,and their U.S.tax liability is $17,610.Arin and Bo's foreign tax credit is:
A)$0.
B)$600.
C)$1,600.
D)$3,213.

Question

Quizplus · Accepted Answer

The foreign tax credit is designed to prevent double taxation by allowing taxpayers to credit the amount of foreign taxes paid against their U.S. tax liability. Since Arin and Bo paid $1,600 in foreign income taxes, they can claim the full amount as a credit against their U.S. tax liability, assuming it does not exceed the limit based on their taxable income from foreign sources and their total U.S. tax liability.

Arin and Bo Have $74,000 Total Taxable Income,which Includes $13,500