Reference no: EM133189105

Question - Blue Sky, Inc., a U.S. corporation, is a manufacturing concern that sells most of its products in the United States. It also conducts some business in the European Union through various branches. During the current year, Blue Sky reports taxable income of $700,000, of which $500,000 is U.S.-sourced and $200,000 if foreign-sourced. Foreign income taxes paid amounted to $35,000. Blue Sky's U.S. income tax liability is $147,000. Compute Blue Sky's U.S. income tax liability net of the allowable foreign tax credit.