Question

Chapeau Company, a U.S. corporation, operates through a branch in Champagnia. The source rules used by Champagnia are identical to those used by the United States. For 2019, Chapeau has $4,800 of gross income: $2,880 from U.S. sources and $1,920 from sources within Champagnia. The $2,880 of U.S. source income and $1,680 of the foreign source income are attributable to manufacturing activities in Champagnia (foreign branch income). The remaining $240 of foreign source income is passive category interest income. Chapeau had $1,200 of expenses other than taxes, all of which are allocated directly to manufacturing income ($480 of which is apportioned to foreign sources). Chapeau paid $262 of income taxes to Champagnia on its manufacturing income. The interest income was subject to a 10 percent withholding tax of $24.

Compute Chapeau’s total allowable foreign tax credit in 2019

Answer 1