Collins, Inc.received gross foreign-source dividend income of $250,000.Foreign taxes withheld on the dividend were $25,000 and no § 902 credit is available.Its worldwide taxable income for the tax year is $500,000.U.S.tax before the FTC is $175,000.Collins' current year FTC is $87,500.

Question

Quizplus · Accepted Answer

The current year FTC cannot exceed the US tax before the FTC, so if US tax before the FTC is $175,000, the maximum FTC that Collins can claim is also $175,000. Therefore, the statement is false as Collins' current year FTC of $87,500 is less than the maximum FTC it can claim.