Under What Condition May It Be to the Taxpayer's Advantage

question 21

Multiple Choice

Under what condition may it be to the taxpayer's advantage to take a deduction for total foreign taxes paid rather than a tax credit for foreign income taxes?

• A)if the foreign income tax rate is greater than the U.S.federal income tax rate
• B)if the foreign income tax rate is less than the U.S.federal income tax rate
• C)if foreign source income is less than domestic income
• D)if foreign taxes other than income taxes are substantial

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Definitions:

Ability-To-Pay Principle

A tax principle that suggests taxes should be levied according to an individual's or entity's ability to pay, typically measured by income or wealth.

Revenue

The cumulative revenue produced from transactions involving the main business activities, such as selling goods or services.

Local Governments

Public administrations operating at the municipal, township, county, or regional level that manage local affairs, regulations, and services.

Property Tax

A levy on property that the owner is required to pay, with the amount usually based on the property's value.