LO.5 Brandy, a U.S. corporation, operates a manufacturing branch in Chad, which does not have an income tax treaty with the United States. Brandy’s worldwide Federal taxable income is $30 million, so it is subject to a 35% marginal tax rate. Profits and taxes in Chad for the current year are summarized as follows. Compute Brandy’s foreign tax credit associated with its operations in Chad.

Income Item Chad Income This Year Chad Tax Rate Chad Tax Paid Manufacturing profits $2,500,000 20% $500,000 Dividend 300,000 5% 15,000