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Sonar, a US company operating in the US and Country X, had pretax US source income and foreign source income as follows: US source income

Sonar, a US company operating in the US and Country X, had pretax US source income and foreign source income as follows:

US source income

$

600,000

Foreign source incomeCountry X

100,000

Total

$

700,000

Sonar paid $40,000 income taxes to Country X. What is Sonars net US tax liability (using a 21% corporate income tax rate) if it claims a foreign tax credit against its US tax liability for the income taxes paid in Country X?

Select one:

a. $107,000

b. $126,000

c. $147,000

d. $166,000

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