Carlotta,Inc. ,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $16,000.What is the corporation's foreign tax credit?
A)$2,000
B)$14,000
C)$16,000
D)$42,000

Question

Quizplus · Accepted Answer

B)Foreign tax credit equals the lesser of foreign taxes paid or accrued ($16,000)or the portion of the U.S.income tax liability attributable to income earned in foreign countries (50,000/150,000)× 42,000 = $14,000 FTC limit