Brandy, a U.S. corporation, operates a manufacturing branch in Chad, which does not have an income tax treaty with the United States. Brandy's worldwide Federal taxable income is $30 million, so it is subject to a 35% marginal tax rate. Profits and taxes in Chad for the current year are summarized as follows.

Compute Brandy's foreign tax credit associated with its operations in Chad.

Transcribed Image Text:

Chad Income Chd Tax had Income Item This Year Tax Paid Manufacturing profits Dividend $2,500,000 300,000 Rate 20% 5% $500,000 15,000