Julia, an Accrual- Method Taxpayer, Is a U

question 38

Multiple Choice

Julia, an accrual- method taxpayer, is a U.S. citizen and a resident of a foreign country. Her tax year for both countries is a calendar year. Julia accrues 50,000 coras for the foreign country tax liability on December 31 of last year when the exchange rate is one cora = $1. Julia pays the tax to the foreign country on its due date, March 1 of the current year. The exchange rate on that date is one cora = $1.50. Julia files her U.S. tax return for last year on April 15 of the current year when the exchange rate is one cora = $2. Julia's foreign tax credit is

• A) $75,000.
• B) $50,000.
• C) $100,000.
• D) none of the above

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