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:

Revenue Function

A mathematical representation that calculates the total revenue generated from the sale of goods or services at different prices.

Total Profits

The overall financial gain made by a business after subtracting total costs from total revenues, indicating the business's financial health over a period.

Cost Function

A mathematical relation that defines the total cost of production as a function of the quantity of output produced.

Profit-Maximizing

The procedure companies undertake to find the best combination of price and production volume for peak profit.