Unformatted text preview: on December 31 of Year 1, and filed his Year 1 U.S. income tax return on April 15 of Year 2? c. What adjustment to the credit claimed in Part b would Arnie have to make when he pays his Country Z taxes on June 1 of Year 2? a. 150,000 doubles/4.25 doubles per $1 U.S. = $35,294 foreign tax credit. The credit benefit is available in Year 2 if Arnie claims the foreign taxes as a credit in the year he pays the taxes. b. 150,000 doubles/3.75 doubles per $1 U.S. = $40,000 foreign tax credit that Arnie can claim in Year 1. This amount is reported on Arnie's Year 1 tax return. c. No adjustment is required because Arnie paid the taxes within two years after the close of the tax year to which the taxes relate....
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- Spring '11
- Taxation in the United States, Arnie, Foreign tax credit