20.21Suppose a firm earns $2.5 million beforetax in Spain. It pays Spanish tax of $1.3 million and remits the remaining $1.2 million as a dividend to its U.S. parent. The Spanish dividend withholding tax is 5%. Under current U.S. tax law, the parent will owe U.S. tax on this dividend equal to

a)$1.15 million

b)$552,000

c)nothing. It will also receive a foreign tax credit equal to $1.3 million.

d)nothing. It will also receive a foreign tax credit equal to $510,000.