A. Purpose of Limitation
The purpose of the foreign tax credit limitation is to confine the effects of the credit to mitigating double taxation of foreign-source taxable income.
The limitation accomplishes this by preventing U.S. persons operating in high tax foreign countries from offsetting those higher foreign taxes against the U.S. tax on U.S.-source taxable income.
Example # 1
Facts: USAco is a domestic corporation. During the current year, USAco has $ 200 of U.S.-source taxable income and $ 100 of foreign-source taxable income that is subject to Read More
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