Information for Year 1, Year 2, and Year 3 for the Argentinan branch of Sigma Corporation is presented in the following table. The corporate tax rate in the Argentina Republic in Year 1 was 25 percent. In Year 2, the Argentina Republic increased its corporate income tax rate to 29 percent. In Year 3, the Argentina Republic increased its corporate tax rate to 36 percent. The U.S. corporate tax rate in each year is 35 percent.

Year 1 Year 2 Year 3 Foreign source income $100,000 $125,000 $125,000 Foreign taxes paid 25,000 36,250 45,000 U.S. tax before FTC 35,000 43,?50 43,750