Ridge, Inc., a domestic corporation, reports worldwide taxable income of $800,000, including a $300,000 dividend from Emma, Inc., a foreign corporation.Ridge's U.S.tax liability before FTC is $280,000.Ridge owns 20% of Emma.Emma's E & P after taxes is $8 million and it has paid foreign taxes of $4 million attributable to that E & P.If Ridge elects the FTC, its U.S.gross income with regard to the dividend from Emma is:

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Ridge's U.S. gross income with regard to the dividend from Emma is $450,000 because the dividend is grossed up by the foreign taxes paid. The gross-up is calculated as $300,000 (dividend) + ($300,000/$8,000,000 * $4,000,000) = $450,000.