1. Waco Leather Inc., a U.S. corporation, reported total taxable income of $4.6 million. Taxable income included $1.45 million of foreign source taxable income from the companys branch operations in Mexico. All of the branch income is foreign branch income. Waco paid Mexican income taxes of $275,500 on its branch income. Compute Wacos allowable foreign tax credit. (Enter your answer in dollars and not in millions of dollars.)

foreign tax credit

2, Sombrero Corporation, a U.S. corporation, operates through a branch in Espania. Management projects that the companys pretax income in the next taxable year will be $122,200: $99,200 from U.S. operations and $23,000 from the Espania branch. Espania taxes corporate income at a rate of 30 percent.

a. If managements projections are accurate, what will be Sombreros excess foreign tax credit in the next taxable year? Assume all of the income is foreign branch income. (Do not round intermediate calculations.)

excess foreign tax credit

2070

b. Management plans to establish a second branch in Italia. Italia taxes corporate income at a rate of 10 percent. What amount of income will the branch in Italia have to generate to eliminate the excess credit generated by the branch in Espania? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

income