Exercise 13-18 (Algorithmic) (LO. 4) In 2017, Henri, a U.S. citizen and calendar

Question

Exercise 13-18 (Algorithmic) (LO. 4) In 2017, Henri, a U.S. citizen and calendar year taxpayer, reports $58,000 of income from France, which imposes a 10% income tax, and $87,000 from Italy, which imposes a 40% tax. In addition, Henri reports taxable income of $116,000 from within the United States. Henri is married filing a joint return, and he claims three dependency exemptions. Henri's U.S. tax before the foreign tax credit is $29,000 Round any division to two decimal places and round your final answer to the nearest dollar Henri's foreign tax credit is 16,111X

Explanation / Answer

ans)

Calculation of Henri's tax credit

Income from France = 58000

Income from Italy = 87000

Total income = 145000

Income from US = 116000

Add: Dependency exemptions 20250

(4050 X 5) _______

Total income 136250

145000 / 136250 = 1.06

29000 X 1.06% = 30740

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