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USCo purchases widgets in the United States and sells then abroad with title on resale passing in the foreign country whose operations sold the widget.

USCo purchases widgets in the United States and sells then abroad with title on resale passing in the foreign country whose operations sold the widget. In addition to earning $100,000 of taxable income from U.S. sales, USCo earns $100,000 of taxable income from Canadian sales by its Canadian branch that is subject to tax in Canada at a 25% rate. USCo also has a Hong Kong branch that earns $100,000 of taxable income from sales that is subject to Hong Kong tax at a 15% rate. Any facts stated in an individual question relate solely to that question.  

 

  • $0 
  • $40,000 
  • $36,000 
  • $42,000 
  • $15,000 in the branch limitation category and $21,000 in the passive limitation category 


If the $100,000 of taxable income earned by the Hong Kong branch constitutes interest income from various Hong Kong banks on which the Hong Kong branches incurs withholding tax a rate 15%, what is USCo's foreign tax credit?  

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