Reference no: EM132550431

Question - Chapeau Company, a U.S. corporation, operates through a branch in Champagnia. The source rules used by Champagnia are identical to those used by the United States. For 2019, Chapeau has $3,200 of gross income: $1,920 from U.S. sources and $1,280 from sources within Champagnia. The $1,920 of U.S. source income and $1,120 of the foreign source income are attributable to manufacturing activities in Champagnia (foreign branch income). The remaining $160 of foreign source income is passive category interest income. Chapeau had $800 of expenses other than taxes, all of which are allocated directly to manufacturing income ($320 of which is apportioned to foreign sources). Chapeau paid $198 of income taxes to Champagnia on its manufacturing income. The interest income was subject to a 10 percent withholding tax of $16.

Required - Compute Chapeau's total allowable foreign tax credit in 2019.