Which of the Following Tax Rules Applies to an Excess

question 21

Multiple Choice

Which of the following tax rules applies to an excess foreign tax credit (FTC) that arises in 2016?

• A) The excess FTC is first carried back to 2015 and any excess is carried forward for 10 years.
• B) The excess FTC is first carried back to 2014, then 2015, and any excess is carried forward for 20 years.
• C) The excess FTC is first carried back to 2013, then 2014, then 2015, and any excess is carried forward for 5 years.
• D)The excess FTC is carried forward 10 years, with no carryback allowed.

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Definitions:

Equity Securities

Equity securities are financial instruments that signify ownership in a company or an entity, and represent a claim on part of its assets and earnings.

Pre-2009 Business Combination

Refers to business mergers or acquisitions that occurred before the implementation of the revised accounting standards in 2009.

Direct Combination Costs

Expenses directly associated with the merging or acquisition of companies, such as legal fees and consultancy charges.

Register and Issue Stock

The process where a company records and distributes new shares of its stock to investors, officially increasing the number of shares available.