Bismarck Corporation Has a Precredit U

question 78

Multiple Choice

Bismarck Corporation has a precredit U.S.tax of $340,000 on $1,000,000 of taxable income in 2017.Bismarck has $200,000 of foreign source taxable income characterized as general category income and $50,000 of foreign source taxable income characterized as passive category income.Bismarck paid $80,000 of foreign income taxes on the general category income and $10,000 of foreign income taxes on the passive category income.What amount of foreign tax credit (FTC) can Bismarck use on its 2017 U.S.tax return and what is the amount of the carryforward,if any?

• A) $90,000 FTC with $0 carryforward.
• B) $85,000 FTC with $5,000 carryforward.
• C) $78,000 FTC with $12,000 carryforward.
• D) $78,000 FTC with $5,000 carryforward.

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Definitions:

Supplies Account

An account used to track the costs of small items or materials that are used in the operations of a business.

Adjusting Journal Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period, ensuring the financial statements reflect accurate and up-to-date information.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired.

Depreciation Expense

Spreading the expense of a tangible asset over the period it's expected to be used.