2021

Windmill Corporation manufactures products in its plants in Iowa, Canada, Ireland, and Australia. Windmill conducts its operations in Canada through a 50 percent owned joint venture, CanCo. CanCo is treated as a corporation for U.S. and Canadian tax purposes. An unrelated Canadian investor owns the remaining 50 percent. Windmill conducts its operations in Ireland through a wholly owned subsidiary, IrishCo. IrishCo is a controlled foreign corporation for U.S. tax purposes. Windmill conducts its operations in Australia through a wholly owned hybrid entity, KiwiCo. KiwiCo is treated as a branch for U.S. tax purposes and a corporation for Australian tax purposes. Windmill also owns a 5 percent interest in a Dutch corporation, TulipCo. During 2020, Windmill reported the following foreign source income from its international operations and investments.

	CanCo		IrishCo		KiwiCo		TulipCo
Dividend income
Amount	$	64,200	$	72,800			$	32,800
Withholding tax		3,210		3,640				4,920
Interest income
Amount	$	46,000
Withholding tax		0		0
Branch income
Taxable income					$	117,000
AUS income taxes					$	39,000

Note: CanCo and KiwiCo derive all of their earnings from active business operations.

Requirement:

1. Classify the income received by Windmill into the appropriate FTC baskets.
2. Windmill has $1,282,000 of U.S. source gross income. Windmill also incurred SG&A of $332,000 that is apportioned between U.S. and foreign source income based on the gross income in each basket. Assume KiwiCos gross income is $307,200. Compute the FTC limitation for each basket of foreign source income.

Complete this question by entering your answers in the tabs below. Reg A Req B Classify the income received by Windmill into the appropriate FTC baskets. (Leave no answer blank. Enter zero if applicable.) Gross income Passive General Totals $ 0 $ 0 Complete this question by entering your answers in the tabs below. Req A Req B Windmill has $1,282,000 of U.S. source gross income. Windmill also incurred SG&A of $332,000 that is apportioned between U.S. and foreign source income based on the gross income in each basket. Assume KiwiCo's gross income is $307,200. Compute the FTC limitation for each basket of foreign source income. (Do not round any division. Round other intermediate computations and final answers to the nearest whole dollar amount.) Show less A! Foreign tax credit limitation on passive category income Foreign tax credit limitation on general category income Complete this question by entering your answers in the tabs below. Req A Req B Windmill has $1,282,000 of U.S. source gross income. Windmill also incurred SG&A of $332,000 that is apportioned between U.S. and foreign source income based on the gross income in each basket. Assume KiwiCo's gross income is $307,200. Compute the FTC limitation for each basket of foreign source income. (Do not round any division. Round other intermediate computations and final answers to the nearest whole dollar amount.) Show less A! Foreign tax credit limitation on passive category income Foreign tax credit limitation on general category income