Compute Chapeau total allowable foreign tax credit

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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 2020, Chapeau has $11,600 of gross income: $6,960 from U.S. sources and $4,640 from sources within Champagnia. The $6,960 of U.S. source income and $4,060 of the foreign source income are attributable to manufacturing activities in Champagnia (foreign branch income). The remaining $580 of foreign source income is passive category interest income. Chapeau had $2,900 of expenses other than taxes, all of which are allocated directly to manufacturing income ($1,160 of which is apportioned to foreign sources). Chapeau paid $534 of income taxes to Champagnia on its manufacturing income. The interest income was subject to a 10 percent withholding tax of $58. Compute Chapeau's total allowable foreign tax credit in 2020.

Reference no: EM133049438

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