Ashley, a U

question 5

Multiple Choice

Ashley, a U.S. citizen, works in England for part of the year. She earns $40,000 in England, paying $10,000 in income taxes to the British government. Her U.S. income is $60,000 and she pays $12,000 in U.S. taxes. Her taxes on her worldwide income are $20,000. What is Ashley's foreign tax credit? Assume she does not qualify for the foreign-earned income exclusion.

• A)$8,000
• B)$10,000
• C)$12,000
• D)none of the above

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Definitions:

Income Tax Expense

The amount of money a company is required to pay in taxes based on its taxable income, accounted for in the income statement.

Deferred Tax Liability

A tax obligation that a company owes but is not required to pay until a future date, often resulting from differences in accounting practices.

Tax Laws

The legal standards and regulations governing the collection of taxes by the government from individuals and entities.

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, usually due to timing differences between accounting practices and tax laws.