Leland Corporation has a precredit U. S. tax of $210,000 on $1,000,000 of taxable income in 2019. Leland has $400,000 of foreign source taxable income and paid $160,000 of foreign income taxes on this income. All of the foreign source income is treated as foreign branch income for foreign tax credit purposes. What is the maximum amount of foreign tax credit that Leland can claim on its 2019 U. S. income tax return

Question

Yasmin Morrow

Business

23 November, 00:42

Leland Corporation has a precredit U. S. tax of $210,000 on $1,000,000 of taxable income in 2019. Leland has $400,000 of foreign source taxable income and paid $160,000 of foreign income taxes on this income. All of the foreign source income is treated as foreign branch income for foreign tax credit purposes. What is the maximum amount of foreign tax credit that Leland can claim on its 2019 U. S. income tax return

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Cale Tapia · Answer 1

FTC = $84000

The maximum amount of foreign tax credit that leland can claim on its 2019 U. S. income tax return is $84000

Explanation:

The recredit U. S. tax on $1,000,000 of taxable income in 2019 = $210,000

Foreign source taxable income which leland has = $400,000

The maximum amount of foreign tax credit that leland can claim on its 2019 U. S. income tax return can be calculated as:

FTC = ($400,000/$1,000,000) * $210,000

FTC = $84000

The maximum amount of foreign tax credit that leland can claim on its 2019 U. S. income tax return is $84000