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Pursco, Inc. is a U . S . C - Corporation that purchases scientific equipment from an unrelated third - party supplier for resale worldwide

Pursco, Inc. is a U.S. C-Corporation that purchases scientific equipment from an unrelated third-party supplier for resale worldwide and pays corporate tax at a 21% rate. During the current year, Pursco, Inc. has $100,000,000 of sales, a gross profit of $40,000,000, and incurs $30,000,000 of selling, general, and administrative expenses (SG&A), thereby generating U.S. worldwide taxable income of $10,000,000. Pursco, Inc.s sales include $20,000,000 of sales to foreign customers. The gross profit on these foreign sales is $10,000,000. Pursco, Inc. transferred title abroad on all these foreign sales; hence, the entire $10,000,000 of gross profit is classified as foreign-source income. Although Pursco, Inc. paid no foreign tax on these sales to foreign customers, it has $1,000,000 of excess foreign tax credits from the prior year in the same general foreign tax credit limitation basket i.It is., the general basket.
Compute Pursco, Inc.s total foreign tax credit, as well as the amount of excess credits (or excess limitation), using gross profit as a basis for apportioning SG&A.provide a description of the tax rules, including relevant code section(s), being applied in the problem and why the taxpayer qualifies for that treatment.
How can Pursco, Inc. achieve a larger foreign tax credit?

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