Which of the Following Statements About the Foreign Tax Credit

question 13

Multiple Choice

Which of the following statements about the foreign tax credit limitation is false?

• A) The foreign tax credit cannot exceed the U.S. tax on foreign source income.
• B) Foreign tax credits in excess of the limit can be carried forward indefinitely.
• C) Cross-crediting of taxes paid in high-tax and low-tax foreign jurisdictions can increase allowable foreign tax credits.
• D) The foreign tax credit limitation is based on the ratio of foreign source income to total taxable income.

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Definitions:

Offer

A proposal presented by one party to another with the intention to create a legally binding agreement upon acceptance.

Escrow Account

An escrow account is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction, ensuring fair and secure dealings.

Objective Theory

A legal principle stating that the terms of a contract are interpreted based on external expressions (actions, words) rather than internal intentions.

Offeror's Words

The specific language or phrasing used by the person making an offer in a contract scenario, which can impact the terms and acceptance of the contract.