A U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Question

Quizplus · Accepted Answer

Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S. tax rate can help alleviate the problem of excess foreign taxes. This is because U.S. corporations can use the foreign tax credit to offset U.S. tax liability on foreign income, but the credit is limited to the amount of U.S. tax that would be paid on that income. If the foreign tax rate is higher than the U.S. tax rate, there may be excess foreign taxes that cannot be fully used as a credit. However, if the foreign income is subject to a tax rate lower than the U.S. tax rate, it may be possible to fully use the foreign tax credit and avoid excess foreign taxes.

A USCorporation May Be Able to Alleviate the Problem of Excess