How canadian income taxes are eligible for taken foreign tax

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Problem 1: SMALLco is a domestic corporation that has elected S corporation status. SMALLco wholly owns a Canadian corporation, CANco. During the current year, CANco derives $100,000 of taxable income, pays $40,000 in Canadian income taxes, and 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:

Option (a) SMALLco.

Option (b) shareholders of SMALLCO.

Option (c) both SMALLco and SMALLco's shareholders.

Option (d) neither SMALLco nor its shareholders.

Reference no: EM132476539

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