As of December 31, 2018, USAco is the wholly-owned U.S. subsidiary of FORCo, a foreign corporation. USAco's income statement in millions of dollars, appears as follows:

	Income Statement
Gross Profit	400
Administrative Expenses	300
Interest Expense	100

The interest expense of $100 is on a longterm note payable from USAco to FORCo, which is entitled to the benefits of a treaty that exempts interest from withholding tax. What is the maximum amount of interest that USAco may deduct on its return?

Question 7 options:

1)

100.

2)

60.

3)

30.

4)

40.