Your client holds foreign tax credit (FTC) carryforwards, i.e., it is in an “excess credit” position. Give at least three planning ideas that the client should implement, so as to free up the suspended FTCs.
• Generate “same basket” foreignsource income that is subject to a tax rate lower than the taxpayer’s marginalU.S. tax rate.
• Time the repatriation of foreignsource earnings to coincide with “excess limitation” years.
• Deduct foreign taxes in years when the deduction benefit exceeds the FTC benefit.
• Convert deductions related to foreign-source income so that they now relate to U.S.-source income instead.
Match the definition with the correct term.
c. Allocation and apportionment
d. Qualified business unit
e. Tax haven
f. Income tax treaty
g. Section 482