Asked by Samantha Ortiz on May 20, 2024

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Adrienne has total taxable income of $93,000 which includes $10,000 taxable income from India.She paid $2,800 in foreign income taxes,and her U.S.tax liability is $25,210.Adrienne's foreign tax credit is:

A) $0.
B) $2,711.
C) $2,800.
D) $25,210.

Foreign Tax Credit

An irreversible tax credit for income taxes remitted to a foreign country because of withholdings on foreign income tax.

Taxable Income

Income that is subject to taxation, after all allowed deductions and exemptions are subtracted from gross income.

U.S. Tax Liability

The total amount of tax owed to the federal government by an individual or entity.

  • Comprehend the employment and calculation of foreign tax credits to circumvent double taxation.
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JC
Justis CoventryMay 25, 2024
Final Answer :
B
Explanation :
To determine Adrienne's foreign tax credit, we need to compare the amount of foreign income tax paid to the U.S. tax liability on the same income.

Adrienne's U.S. tax liability is $25,210, and she has paid $2,800 in foreign income taxes. Since the foreign income tax paid is less than the U.S. tax liability on the same income, Adrienne is eligible for a foreign tax credit.

The foreign tax credit is limited to the lesser of the foreign income tax paid or the U.S. tax liability on the same income, so Adrienne's foreign tax credit is $2,800 (the amount of foreign tax paid).

Therefore, the correct answer is B) $2,711.