Artco Company , based in New York , has a branch located in Singapore that generated income before tax of 1 , 500 , 000 Singaporean dollars ( SGD ) in the current year . The tax rates in Singapore and U . S . is 17 % and 21 % respectively . The following exchange rates for the current year are : Average for the year December 31 USS per SGD 0 . 75 0 . 76

Required : 1 . Calculate amount of U . S . taxable income in U . S . dollars related to the Singaporean branch . ( 2 marks )

2 . Calculate amount of foreign tax credit allowed in U . S . dollars related to the Singaporean branch . ( 6 marks )

3 . Which approach would make the company better off , deduction and credit approach ? Support your answer with computation of the net U . S . tax liability related to the Singaporean branch . ( 13 marks )

4 . Under U . S . tax law , what happens to excess foreign tax credit ? ( 4 marks )