Mega, Inc, a U Mega Paid $15,000 Income Tax to Country M

Mega, Inc., a U.S. multinational, has pretax U.S. source income and foreign source income as follows: $\begin{array}{lr}\text {U. S. source income }&\$760,000\\\text { Foreign source income-Country \( M \) }&80,000\\\text {Total }&\$840,000\\\end{array}$
Mega paid $15,000 income tax to Country M. Assume Mega's foreign source income does not qualify as foreign-derived intangible income. Mega has a $25,000 foreign tax credit carryforward. What is Mega's U.S. tax liability if it takes the foreign tax credit?

A) $16,800
B) $136,600
C) $176,600
D) $159,600

Correct Answer:

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