USCo,a domestic corporation,receives $100,000 of foreign-source income in the general limitation income category and $40,000 of foreign-source income in the passive income category.Worldwide taxable income is $1,200,000 and the U.S.tax liability before FTC is $420,000.Foreign taxes attributable to the general limitation income are $60,000 and to the passive income are $4,000.What is the total FTC allowed to U.S.corporation for the tax year?

Question

Quizplus · Accepted Answer

General limitation income basket FTC is $35,000,the lesser of $60,000 actual foreign taxes or the limitation of $35,000 [i.e.,$420,000 F1F1F1S1F1F1F10 ($100,000/$1,200,000)].
Passive income basket FTC is $4,000,the lesser of $4,000 actual foreign taxes or the limitation of $14,000 [i.e.,$420,000 F1F1F1S1F1F1F10 ($40,000/$1,200,000)].
The total FTC is $39,000 .

USCo,a Domestic Corporation,receives $100,000 of Foreign-Source Income in the General