Suppose a Foreign Subsidiary Earns $2 Million After Paying Foreign

question 20

Multiple Choice

Suppose a foreign subsidiary earns $2 million after paying foreign income taxes of $500,000.If the subsidiary retains all of its earnings,what is the amount of the indirect foreign tax credit that its parent will receive?

• A)$500,000
• B)$250,000
• C)$400,000
• D)it receives no foreign tax credit