D. Passive income
Explanation:
The foreign tax credit provided under Sec. 901 is limited by Sec. 904 to the portion of a taxpayer’s total tax equal to the ratio of the taxpayer’s taxable income from sources outside the United States to the taxpayer’s entire taxable income for the same tax year. Under Sec. 904(d), this foreign tax credit limitation is computed separately for different categories of income. The American Jobs Creation Act of 2004, P.L. 108-357, reduced the foreign tax credit limitation categories from eight to two: passive category income and general category income.
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