Global Corporation, a U Global Paid $15,000 Income Tax to Country X

question 40

Multiple Choice

Global Corporation, a U.S. multinational, began operations this year. Global had pretax U.S. source income and foreign source income as follows: $\begin{array}{lr}\text {U. S. source income }&\$700,000\\\text {Foreign source income-Country \( X \) }&100,000\\\text { Total}&\$800,000\\\end{array}$
Global paid $15,000 income tax to Country X. Assume Global's foreign source income does not qualify as foreign-derived intangible income. What is Global's U.S. tax liability if it takes the foreign tax credit?

• A) $153,000
• B) $168,000
• C) $147,000
• D) $238,000

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Definitions:

Gains From Trade

Gains achieved by dividing tasks and trading; in this way people can get more of what they want through trade than they could if they tried to be self-sufficient.

Total Surplus

The sum of consumer surplus and producer surplus; a measure of the total benefit to society from a market transaction.

Consumer Surplus

The differential between consumers’ readiness to pay a certain amount for a service or good and the payment completed.

Equilibrium

The condition in a market where the quantity demanded equals the quantity supplied, leading to no inherent force for price change.