In year 1, FasCo earns a worldwide income of $0, which includes $100,000 of foreign-source income on which FasCo paid $30,000 of creditable foreign taxes and an Overall Domestic Loss of $100,000. In year 2, FasCo again earns $100,000 of foreign-source income on which it again pays $30,000 of creditable foreign taxes. However, the U.S. operations turn around and earn U.S.-source income of $100,000, resulting in a pre-credit U.S. tax of $42,000 (21% x $200,000 worldwide income]. 

Required: What is FasCo’s net U.S. tax liability in year 2? Show your work.

Answer rating: 100% (QA)

As US based income is 100000 and others wi... View the full answer