During the year, Green Corporation (a U.S.corporation) has U.S.-source income of $750,000 and foreign income of $500,000.The foreign-source income generates foreign income taxes of $240,000.The U.S.income tax before the foreign tax credit is $425,000.Green Corporation's foreign tax credit is:

Question

Quizplus · Accepted Answer

The foreign tax credit is limited to the lesser of the foreign taxes paid ($240,000) or the U.S. tax on foreign-source income. The U.S. tax on foreign-source income is calculated as ($500,000 / $1,250,000) * $425,000 = $170,000. Thus, the foreign tax credit is $170,000.

During the Year, Green Corporation (A U