Question
Chapeau Company, a U.S. corporation, operates through a branch in Champagnia. The source rules used by Champagnia are identical to those used by the United
Chapeau Company, a U.S. corporation, operates through a branch in Champagnia. The source rules used by Champagnia are identical to those used by the United States. For 2022, Chapeau has $6,000 of gross income: $3,600 from U.S. sources and $2,400 from sources within Champagnia. The $3,600 of U.S. source income and $2,100 of the foreign source income are attributable to manufacturing activities in Champagnia (foreign branch income). The remaining $300 of foreign source income is passive category interest income. Chapeau had $1,500 of expenses other than taxes, all of which are allocated directly to manufacturing income ($600 of which is apportioned to foreign sources). Chapeau paid $370 of income taxes to Champagnia on its manufacturing income. The interest income was subject to a 10 percent withholding tax of $30.
Compute Chapeau's total allowable foreign tax credit in 2022.
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