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What is its foreign tax credit for the year

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Question - DC, a Delaware corporation, owns 5 percent of the stock of FC, a country X corporation that is not engaged in a U.S. Trade/Business and whose other shareholders are foreign persons. DC also holds debt obligations issued by FC. During the current year, FC earns $2000 (which is subject to $250 of foreign tax); DC receives $100 of dividends and $100 of interest from FC. Country X tax of $20 is withheld from each of these items of income. DC also has $1,000 of taxable sales income from branch operations in country X, and it pays $400 of country X tax on this income. DC has no other income than the items mentioned. If DC's pre-credit U.S. tax is 35% of taxable income, what is its foreign tax credit for the year?

Reference no: EM131997339

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