Windmill Corporation manufactures products in its plants in Iowa, Canada, Ireland, and Australia. Windmill conducts its operations in Canada through a 50 percent owned joint venture, CanCo. CanCo is treated as a corporation for U.S. and Canadian tax purposes. An unrelated Canadian investor owns the remaining 50 percent. Windmill conducts its operations in Ireland through a wholly owned subsidiary, IrishCo. IrishCo is a controlled foreign corporation for U.S. tax purposes. Windmill conducts its operations in Australia through a wholly owned hybrid entity, KiwiCo. KiwiCo is treated as a branch for U.S. tax purposes and a corporation for Australian tax purposes. Windmill also owns a 5 percent interest in a Dutch corporation, TulipCo. During 2020, Windmill reported the following foreign source income from its international operations and investments.

Note: CanCo and KiwiCo derive all of their earnings from active business operations.

Requirement:

1. Classify the income received by Windmill into the appropriate FTC baskets.
2. Windmill has $1,292,000 of U.S. source gross income. Windmill also incurred SG&A of $342,000 that is apportioned between U.S. and foreign source income based on the gross income in each basket. Assume KiwiCos gross income is $340,700. Compute the FTC limitation for each basket of foreign source income.

Canco Irishco KiwiCo Tulipco $70,200 $86,800 3,510 4,340 $36,800 5,520 Dividend income Amount Withholding tax Interest income Amount Withholding tax Branch income Taxable income AUS income taxes $51,000 $124,500 $ 41,500 Canco Irishco KiwiCo Tulipco $70,200 $86,800 3,510 4,340 $36,800 5,520 Dividend income Amount Withholding tax Interest income Amount Withholding tax Branch income Taxable income AUS income taxes $51,000 $124,500 $ 41,500