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SMALLco is a domestic corporation that has elected S corporation status. SMALLco wholly owns a Canadian corporation, CANco. CANco earns $100,000 of income during the year and pays $40,000 in Canadian income taxes. CANco distributes a $60,000 dividend to SMALLco. The Canadian income taxes of $40,000 are eligible to be taken as a foreign tax credit by:
(a) SMALLco.
(b) shareholders of SMALLco.
(c) both SMALLco and SMALLco's shareholders.
(d) neither SMALLco nor its shareholders.
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