58. 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 2019, Windmill reported the following foreign source income from its international operations and investments.

a. Classify the income received by Windmill into the Page 24-42 appropriate FTC baskets.

b. Windmill has $1,250,000 of U.S. source gross income.
Windmill also incurred SG&A of $300,000 that is apportioned between U.S. and foreign source income based on the gross income in each basket. Assume KiwiCo’s gross income is $200,000. Compute the FTC limitation for each basket of foreign source income.