Old,Inc.,a U.S.corporation,earns foreign-source income classified in two different limitation baskets in the current year.It earns $20,000 in passive foreign-source income and suffers a net loss of $35,000 in the general limitation basket.What is the numerator of the FTC limitation formula for the passive basket in the current year?

Question

Quizplus · Accepted Answer

The $35,000 loss in the general limitation basket must be offset against the $20,000 income in the passive basket.Because there is not enough income in the passive basket,the numerator in this basket must be reduced to zero.The remaining $15,000 in general basket loss is offset with U.S.-source income from Old,Inc.,resulting in a $15,000 overall foreign loss.

Old,Inc,A U