Koscil Inc. had the following taxable income. U.S. source income$1,435,000 Foreign source income 850,000 Taxable income$2,285,000 Koscil paid $315,000 foreign income tax. Compute its U.S. income tax liability.
What will be an ideal response?
U.S. tax before credits = $479,850. Foreign tax credit limitation = $178,500 = $479,850 × $850,000/$2,285,000. U.S. tax liability = $301,350 = $479,850 ? $178,500.
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