Brian and Clara paid $4,350 in foreign income taxes to Mexico.Their total income was $105,000,which included $16,000 of foreign income.Their U.S.tax liability is $22,750.How much can Brian and Clara claim as foreign tax credit?

Question

Quizplus · Accepted Answer

The foreign tax credit is limited to the lesser of the foreign taxes paid ($4,350) or the proportion of U.S. tax liability that corresponds to the foreign income. The proportion is ($16,000/$105,000) * $22,750 = $3,467.

Brian and Clara Paid $4,350 in Foreign Income Taxes to Mexico.Their