Pennworth Corporation Operates in the United States and Foreign Country

Pennworth Corporation operates in the United States and foreign country M. Its domestic subsidiary Delco, Inc. operates in foreign country N. This year, the two corporations report the following. $$\begin{array} { | l | r | r | r | } \hline & \begin{array} { l } \text { U.S. Source } \\\text { Income }\end{array} & \begin{array} { c } \text { Foreign } \\\text { Source Income }\end{array} & \begin{array} { c } \text { Foreign Income } \\\text { Tax Paid }\end{array} \\\hline \text { Pennworth } & \$ 3,000,000 & \$ 1,000,000 & \$ 400,000 \\\hline \text { Delco } & 0 & 1,000,000 & 100,000 \\\hline\end{array}$$ If Pennworth and Delco file a consolidated U.S. tax return, compute consolidated income tax liability.

A) $1,200,000
B) $1,260,000
C) $1,700,000
D) $1,020,000