Waco Leather Inc., a U.S. corporation, reported total taxable income of $5.75 million. Taxable income included $1.35 million of foreign source taxable income from the companys branch operations in Mexico. All of the branch income is general category income. Waco paid Mexican income taxes of $405,000 on its branch income.

Compute Wacos allowable foreign tax credit. Assume a U.S. corporate tax rate of 34 percent.

Foreign tax credit