HomeworkLib
Question

Foreign Exclusion and Tax Credit (LO 7.6) Taxpayer L has income of $55,000 from Norway, which...

Foreign Exclusion and Tax Credit (LO 7.6)

Taxpayer L has income of $55,000 from Norway, which imposes a 40 percent income tax, and income of $45,000 from France, which imposes a 30 percent income tax. L has additional taxable income from U.S. sources of $200,000 and U.S. tax liability before credits of $105,000. What is the amount of the foreign tax credit? Do not round any division in your computations. If required, round your answer to the nearest dollar.

a. $35,500

b. $16,500

c. $45,000

d. $35,000

e. $100,000

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer: (a) 35,500

Explanation

​​​​In the foreighn tax credit we include only those we earned in the foreighn country and subject to be related to foreighn income taxes in that the country. We can claimed and deduction or claim to credit on the foreighn country only.

calculations are as:

1. Norway tax liability =55000*40%=22000

2. France tax liability =45000*30%=13500

Total foreighn tax credit/paid =(22000+13500)=35,500

If we find the overall limitations value

So we apply this formula:

(net foreighn income/u.s taxable income)*u.s tax liability

​​​​​​Net foreighn income=55000+45000=100000

U.S taxable income=55000+45000+200000=300,000

U.S tax liability =105,000

=(100,000/300,000)*105000

35000

0 0
Add a comment
Know the answer?
Add Answer to:
Foreign Exclusion and Tax Credit (LO 7.6) Taxpayer L has income of $55,000 from Norway, which...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • John and Joan pay $16,500 of qualified adoption expenses in 2018 to finalize the adoption of...

    John and Joan pay $16,500 of qualified adoption expenses in 2018 to finalize the adoption of a qualified child. Their AGI is $197,000 for 2018. What is their adoption credit for 2018? a.$13,460 b.$0 c.$13,810 d.$16,500 Taxpayer L has income of $55,000 from Norway, which imposes a 40 percent income tax, and income of $45,000 from France, which imposes a 30 percent income tax. L has additional taxable income from U.S. sources of $200,000 and U.S. tax liability before credits...

  • Question 57 of 75. Can a taxpayer claim both the foreign earned income exclusion and the...

    Question 57 of 75. Can a taxpayer claim both the foreign earned income exclusion and the foreign tax credit? No, the taxpayer must choose one tax benefit of the other. Yes, but the taxpayer cannot claim the credit for taxes paid on excluded income Yes, but the taxpayer cannot claim the credit and exclusion on income from the same country. Yes, but the taxpayer cannot claim the credit and exclusion on income in the same category 1 0 Mark for...

  • Question 57 of 75 Can a taxpayer claim both the foreign earned income exclusion and the...

    Question 57 of 75 Can a taxpayer claim both the foreign earned income exclusion and the foreign tax credit? O No, the taxpayer must choose one tax benefit or the other. O Yes, but the taxpayer cannot claim the credit for taxes paid on excluded income O Yes, but the taxpayer cannot claim the credit and exclusion on income from the same country O Yes, but the taxpayer cannot claim the credit and exclusion on income in the same category...

  • Foreign Tax Credit (LO 7.6) Martha and Lew are married taxpayers with $400 of foreign tax...

    Foreign Tax Credit (LO 7.6) Martha and Lew are married taxpayers with $400 of foreign tax withholding from dividends in a mutual fund. They have enough foreign income from the mutual fund to claim the full $400 as a foreign tax credit. Their tax bracket is 24 percent and they itemize deductions. Should they claim the foreign tax credit or a deduction for foreign taxes on their Schedule A? The foreign tax deduction will result in a $ tax benefit...

  • Question 55 of 75. The foreign earned income exclusion is allowed under IRC Section 401 411...

    Question 55 of 75. The foreign earned income exclusion is allowed under IRC Section 401 411 911 941 Mark for follow up Question 56 of 75. Can a taxpayer claim both the forei expayer claim both the foreign earned income exclusion and the foreign tax No, the taxpayer must choose one tax benefit or the other. O Yes, but the taxpayer cannot cla but the taxpayer cannot claim the credit for taxes paid on excluded income es but the taxpayer...

  • According to Publication 514, Foreign Tax Credit for Individuals, a U.S. nonresident alien taxpayer may qualify...

    According to Publication 514, Foreign Tax Credit for Individuals, a U.S. nonresident alien taxpayer may qualify for the Foreign Tax Credit if they pay or accrue tax to a foreign country on income from foreign sources if which of the following is true? A) They have a diplomatic passport. B) They claim the Foreign Tax Credit as a treaty benefit. C) The income was earned in the year the green card test was met. D) The income is effectively connected...

  • 61. Jim has foreign income. He earns $26,000 from Country A which taxes the income at...

    61. Jim has foreign income. He earns $26,000 from Country A which taxes the income at a 20 percent rate. He also has income from Country B of $18,000. Country B taxes the $18,000 at a 10 percent rate. His US taxable income is $90,000, which includes the foreign income. His US income tax on all sources of income before credits is $19,000. What is his foreign tax credit? a. $6,500 b. $7,000 C. $9,289 d. $19,000 e. Jim does...

  • Exclusion is limited to an indexed amount of $103,900 for 2018 Problem 11-24 (a) (LO. 2)...

    Exclusion is limited to an indexed amount of $103,900 for 2018 Problem 11-24 (a) (LO. 2) Catherine is a U.S. citizen who is employed by DSC, Inc., a global company. Beginning on August 1, 2018, Catherine began working in Augsburg, Germany. She worked for 153 days of 2018. She worked there until March 31, 2019, when she transferred to Kamnik, Slovenia. She worked in Kamnik for the remainder of 2019. Her salary for the first seven months of 2018 was...

  • 8 Credits [1] If a taxpayer qualifies for the Earned Income Credit, such credit can be...

    8 Credits [1] If a taxpayer qualifies for the Earned Income Credit, such credit can be subtracted from A. Gross income to arrive at adjusted gross income. B. Adjusted gross income to arrive at taxable income. C. The tax owed, or can result in a refund, but only if the taxpayer had tax withheld from wages. D. The tax owed, or can result in a refund, even if the taxpayer had no tax withheld from wages. [2] Which of the...

  • paid as an itemized deduction rather than as a foreign tax credit? A) The foreign tax...

    paid as an itemized deduction rather than as a foreign tax credit? A) The foreign tax paid was less than 10% of AGL B) The foreign tax paid was to a South American country. C) The foreign tax paid was a property tax. D) The foreign tax paid was an income tax. 23) Waseem has $103,000 total taxable income, which includes $11,000 of taxable income from India. He paid $4,000 in foreign income taxes and his U.S. tax liability is...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT