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Lewis Company manufactures linens, sheets, and other related items at its factories in the U.S. and in Mexico through Mexican branch operations. Relevant information for

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Lewis Company manufactures linens, sheets, and other related items at its factories in the U.S. and in Mexico through Mexican branch operations. Relevant information for 2019 is as follows: U.S. Mexico Gross sales $2,400,000 $1,600,000 Directly allocable expenses 300,000 600,000 Tax Basis of Manufacturing Assets 4,000,000 6,000,000 All of the U.S. branch sales were to U.S. customers, and all of the Mexican branch sales were to customers in Mexico and Argentina. Lewis incurred $300,000 of general administrative expenses which the tax department classifies as support expenses. These expenses are allocated for sourcing purposes on the basis of gross income. Lewis also incurred $500,000 of interest expense which is sourced under the rules governing the sourcing of interest. 1. Based on the above, please determine Lewis's foreign and U.S. source income for 2019. 2. If Lewis pays U.S. tax at a 21% rate, and paid foreign taxes of $500,000 in 2019, what will the U.S. tax be after taking the foreign tax credit into account? Lewis Company manufactures linens, sheets, and other related items at its factories in the U.S. and in Mexico through Mexican branch operations. Relevant information for 2019 is as follows: U.S. Mexico Gross sales $2,400,000 $1,600,000 Directly allocable expenses 300,000 600,000 Tax Basis of Manufacturing Assets 4,000,000 6,000,000 All of the U.S. branch sales were to U.S. customers, and all of the Mexican branch sales were to customers in Mexico and Argentina. Lewis incurred $300,000 of general administrative expenses which the tax department classifies as support expenses. These expenses are allocated for sourcing purposes on the basis of gross income. Lewis also incurred $500,000 of interest expense which is sourced under the rules governing the sourcing of interest. 1. Based on the above, please determine Lewis's foreign and U.S. source income for 2019. 2. If Lewis pays U.S. tax at a 21% rate, and paid foreign taxes of $500,000 in 2019, what will the U.S. tax be after taking the foreign tax credit into account

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