Question

Night, Inc. a domestic corporation earned $300,000 from foreign manufacturing activities on which it paid $90,000...

Night, Inc. a domestic corporation earned $300,000 from foreign manufacturing activities on which it paid $90,000
of foreign income taxes. Night's foreign sales income is taxed at a 50% foreign tax rate. What amount of foreign sales
income can Night earn without generating any excess FTCs for the current year? Assume a 34% tax rate.

Homework Answers

Answer #1

Particulars

Amount ($)

Foreign tax income

300000

Income tax paid

90000

Since income is taxed at 50% rate thus, the assessable foreign tax income

180000

Actual tax liability @34%

61200

Excess tax paid

Income tax paid

90000

Less: Actual tax liability @34%

61200

Excess tax paid

28800

Rate of tax

34%

Amount of income Night can earn without generating FCT for the current year will be:

Excess tax paid

28800

Amount of income without generating FCT

84705.88

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