Juliann reported foreign income tax of $1,000 on foreign income of $8,000.Her worldwide taxable income was $89,000 and her U.S.tax liability was $23,000.What is the amount of foreign tax credit she is allowed? Briefly explain your answer.

FTC = $1,000: The amount of foreign tax credit is limited to the lesser of:
• foreign tax paid,or
• [foreign-source income/worldwide taxable income] × U.S.tax liability.
In this case,the limitation calculation is ($8,000/$89,000)× $23,000 = $2,067.Thus,the amount of foreign tax credit is equal to the $1,000 foreign tax paid because it is less.