Jovar Inc, a U Jovar Paid $50,000 Income Tax to Country O

Jovar Inc., a U.S. multinational, began operations this year. Jovar had pretax U.S. source income and foreign source income as follows. $$\begin{array} { l r } \text { U.S. source income } & \$ 600,000 \\\text { Foreign source income--Country O } & \underline { 100,000 } \\\text { Total } & \$ 700,000\end{array}$$ Jovar paid $50,000 income tax to Country O. Compute Jovar's U.S. tax liability if it takes the foreign tax credit.

A) $213,000
B) $221,000
C) $204,000
D) $238,000

Correct Answer:

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