(16) Krebs, Inc., a U.S. corporation, operates an unincorporated branch manufacturing operation in the U.K....
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(16) Krebs, Inc., a U.S. corporation, operates an unincorporated branch manufacturing operation in the U.K. Krebs, Inc., reports $900,000 of taxable income from the U.K. branch on its U.S. tax return, along with $1,600,000 of taxable income from its U.S. operations. The U.K. branch income is all general limitation basket income. Krebs paid $270,000 in U.K. income taxes related to the $900,000 in branch income. Assuming a U.S. tax rate of 35%, what is Krebs U.S. tax liability after any allowable foreign tax credits? a. $0 b. $270,000 c. $605,000 d. $875,000
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