Spartan Corporation manufactures quidgets at its plant in Sparta, Michigan. Spartan sells its quidgets to customers in the United

States, Canada, England, and Australia.

Spartan markets its products in Canada and England through branches in Toronto and London, respectively. Spartan reported total

gross income on U$.$S$.$ sales of $$15,000,000$ and total gross income on Canadian and U$.$K$.$ sales of $$5,000,000,$ split equally between

the two countries. Spartan paid Canadian income taxes of $$600,000$ on its branch profits in Canada and U$.$K$.$ income taxes of

$$700,000$ on its branch profits in the United Kingdom. Spartan financed its Canadian operations through a $$10$ million capital

contribution, which Spartan financed through a loan from Bank of America. During the current year, Spartan paid $$600,000$ in interest

on the loan.

Spartan sells its quidgets to Australian customers through its wholly owned Australian subsidiary. Spartan reported gross income of

$$3,000,000$ on sales to its subsidiary during the year. The subsidiary paid Spartan a dividend of $$670,000$ on December $31($the

withholding tax is $0$ percent under the U$.$S$.-$Australia treaty$).$ Spartan paid Australian income taxes of $$330,000$ on the income

repatriated as a dividend.

Required:

a$.$ Compute Spartan's foreign source gross income and foreign tax $($direct and withholding$)$ for the current year.

b$.$ Assume $20$ percent of the interest paid to Bank of America is allocated to the numerator of Spartan's FTC limitation calculation.

Compute Spartan Corporation's FTC limitation using your calculation from part $($a$)$ and any excess FTC or excess FTC limitation $($all of

the foreign source income is put in the foreign branch FTC basket$).$

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Compute Spartan's foreign source gross income and foreign tax $($direct and withholding$)$ for the current year.

Note: Enter your answers in dollars not in millions of dollars.