Question
Dunne, Inc., a U.S. corporation, earned $500,000 in total taxable income, including $50,000 in foreign-source taxable income from its branch manufacturing operations in Brazil and
Dunne, Inc., a U.S. corporation, earned $500,000 in total taxable income, including $50,000 in foreign-source taxable income from its branch manufacturing operations in Brazil and $20,000 in foreign-source income from interest earned on bonds issued by Dutch corporations. Dunne paid $25,000 in Brazilian income taxes and $3,000 in Dutch income taxes. Assume the U.S. tax rate is 34%.
a. The FTC limit related to the Brazilian manufacturing branch is $____ and of this amount, Dunne is allowed $ . b. The FTC limit related to the Dutch bonds is $_____ and of this amount Dunne is allowed $_____ . c. Dunne's U.S. tax liability (after any available FTC) is $______ . d. Dune has a $ carryforward or carryback in the general limitation basket.
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