Area I: Individual Compliance and Planning — CPA Practice Question 07

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Remember the 'no double benefit' rule. You cannot exclude income AND claim a credit for the taxes paid on that same excluded income.

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C.They can claim a Foreign Tax Credit only for the taxes allocable to the $10,000 of income exceeding the exclusion.✓ Correct

IRC §911(d)(6). No credit or deduction is allowed for foreign taxes paid on amounts excluded from gross income under the FEIE. Since $120,000 of the $130,000 is excluded, only the foreign tax allocable to the remaining $10,000 is eligible for the FTC.

Common mistakes

Assuming the FTC is fully available or fully unavailable.

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Common mistakes

Practice the full CPA TCP Practice Exam 4

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