1. A foreign tax credit would be less common in a

A. A fully operational worldwide tax system

B. A fully operational territorial tax system

C. A hybrid worldwide/territorial tax system

D. A foreign tax credit is equally common in fully operational worldwide and territorial tax systems

2 . In which case will be the foreign tax credit be limited?

A. US tax on US income would be $50,000 without the credit, and US taxes on total income would be $60,000 with the full credit applied

B. US tax on US income would be $50,000 without the credit, and US taxes on total income would be $50,000 with the full credit applied

C. US tax on US income would be $50,000 without the credit, and US taxes on total income would be $40,000 with the full credit applied

D. The foreign tax rate is 0% and the US tax rate is 21%

3. Assume a US individual tax resident has $200 million of US income, and $40 million in foreign income that was subject to US tax. Assume further that the US tax resident has US taxes before the foreign tax credit of $72 million (30% rate), and foreign taxes of $16 million (40% rate). What is the US foreign tax credit amount?

A. $56 million

B. $16 million

C. $12 million

4. Which of the following situations would likely make the foreign tax credit unnecessary?

A. Two countries have a tax treaty

B. A US citizen has income in a foreign country that has a territorial tax system

C. A US citizen earns only passive income in a foreign country

D. A foreign corporation has income in a foreign country that's classified as ECI

5. Which party with foreign income is more likely to claim a US foreign tax credit?

A. A US citizen

B. A US corporation

C. A US citizen and a US corporation are equally likely to claim the US foreign tax credit

D. A citizen of a country with a pure territorial tax system

6. Assume a US tax resident has $2 million of US income and $4 million in foreign income that was subject to US tax. The taxpayer's US tax rate is 20%, and the taxpayer's foreign tax rate is 10%. What is the foreign tax credit?

A. $800,000

B. $400,000

C. $200,000

D. $1.2 million