What is the limit on the foreign tax credit? b. What is the US and total tax paid by Drake?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Drake, Inc., a domestic corporation, has worldwide taxable income of $250,000, consisting of $200,000 U.S.-source income and $50,000 foreign-source dividend income from Jetco, a foreign corporation in which Drake owns 4% of the voting stock.  The foreign tax paid on the dividend income is $20,000.

 

a. What is the limit on the foreign tax credit?

b. What is the US and total tax paid by Drake?

 

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