Question

a U.S. corporation, receives $500,000 of foreign-source taxable income. Foreign taxes of $270,000 are paid. Peanut’s worldwide taxable income is $900,000, and its U.S. Federal income tax liability before any foreign tax credit (FTC) is $170,000. What is Peanut’s FTC carryforward

Answer 1

Answer: $94,444.44

Step-by-step explanation:

Peanut's FTC can be calculated as;

= US Federal tax liability * Foreign-source taxable income/Worldwide taxable income including US

= 170,000 * 500,000/900,000

= $94,444.44