FC (which is not a CFC) is a country X corporation that actively conducts a non-real estate trade or business through a branch, B, in the US. For the current taxable year, FC's balance sheet is as follows (assume amounts are in US dollars and computed in accordance with the regs):

AB FMV

Asset 1 1,000 $2,500

Asset 2 7,500 $7,500

Amount Interest Expense

Liability 1 $ 800 56

Liability 2 $3,200 256

(000,000's omitted)

FC has $200 of gross income of which $120 is ECI (000,000's omitted) and $80 is non-ECI. It has no other expenses except for the interest.

Asset 1 is a US asset producing income (the $120) that is entirely ECI to FC. Asset 2 is an asset in X that produces income ($80). Liabilities 1 and 2 are loans that bear interest at the rates of 7% and 8%, respectively. Liability 1 is a booked liability of B, and Liability 2 is booked in X's home country. What is FC’s maximum interest expense deduction for the taxable year?