C12-Chp-09-1D-FTC-U-S-Taxpayer-with-Foreign-Branch-Subsidiary-Etc

C12-Chp-09-1D-FTC-U-S-Taxpayer-with-Foreign-Branch-Subsidiary-Etc

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f05a41039ff019542854bced2b71e987cf0598be.xlsx Page 1 of 2 Foreign Tax Credit Problem 1. Boston Company London Branch United States United Kingdom Year 1 Year 2 Year 1 Year 2 Revenue in U.S. $700,000 $900,000 Revenue $1,300,000 $1,800,000 Cost of Sales ($300,000) ($400,000) Cost of Sales ($700,000) ($900,000) Other Expense ($200,000) ($200,000) Other Expense ($300,000) ($500,000) Operating Income $200,000 $300,000 Operating Income $300,000 $400,000 Branch income $300,000 $400,000 Total income $500,000 $700,000 U.S. Tax Rate 34% 34% Foreign tax rate 40% 32% U.S Tax before FTC $170,000 $238,000 UK Income taxes $120,000 $128,000 Year 1 Year 2 U.S. Source taxable income $200,000 $300,000 Foreign source taxable income $300,000 $400,000 World wide taxable income $500,000 $700,000 Foreign Source Fraction 60.00% 57.14% U.S. income tax before credits $170,000 $238,000 Foreign Tax Credit Limit $102,000 $136,000 Foreign income tax paid $120,000 $128,000 Foreign tax claimed $102,000 $128,000
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C12-Chp-09-1D-FTC-U-S-Taxpayer-with-Foreign-Branch-Subsidiary-Etc

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