Information for Year 1, Year 2, and Year 3 for the Alpinian branch of Rawl Corporation is presented in the following table. The corporate tax rate in the Alpinian Republic in Year 1 was 11 percent. In Year 2, the Alpinian Republic increased its corporate income tax rate to 15 percent. In Year 3, the Alpinian Republic increased its corporate tax rate to 22 percent. The U.S. corporate tax rate in each year is 21 percent.

 

                                           Year 1       Year 2        Year 3

Foreign source income $75,000 $100,000 $100,000

Foreign taxes paid             8,250     15,000      22,000

U.S. tax before FTC          15,750     21,000      21,000 

 

For Year 1, Year 2, and Year 3, what is the foreign tax credit allowed in the United States?

Answer rating: 100% (QA)

The foreign tax credit is designed to prevent double taxation of income A US company can claim a cr... View the full answer