USCo,a U.S.corporation,reports worldwide taxable income of $1,500,000,including a $300,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's undistributed earnings and profits are $15 million and it has paid $10 million of foreign income taxes attributable to these earnings.What is USCo's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?

Question

Quizplus · Accepted Answer

The deemed paid foreign tax credit is calculated by multiplying the foreign taxes paid by the ratio of the dividend received to the total earnings and profits. Here, $10 million * ($300,000 / $15 million) = $200,000.

USCo,a UScorporation,reports Worldwide Taxable Income of $1,500,000,including a $300,000 Dividend from from ForCo,a