Hamilton, a U.S. corporation, reports the following results from its current year activities:

U.S.-source taxable income ..................................................... $1,000,000

Foreign-source taxable income from manufacturing

branch in Country M .................................................................... 1,000,000

Foreign taxes paid on branch income .......................................... 390,000

Gross U.S. income tax liability ....................................................... 799,000

Hamilton owns 20% of the stock in Beauvais, a foreign corporation. Beauvais pays a $350,000 dividend to Hamilton on April 20 of the current year. Beauvais' pretax profits from post-1986 tax years are $6 million, and its Country X taxes from post-1986 tax years are $1.2 million. Beauvais' E&P under U.S. rules is $4 million, $3.6 million of which was derived from foreign manufacturing and $400,000 of which was earned on foreign securities. All of the foregoing figures were recorded before payment of the dividend.

a. For foreign tax credit purposes, into which of Hamilton's limitation baskets should the dividend from Beauvais be placed and in what amounts?

b. Calculate Hamilton's current year foreign tax credit.

c. How should any excess credits be treated?