McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 19

Mackinac Corporation, a U.S. corporation, reported total taxable income of $5 million in 2011. Taxable income included $1.5 million of foreign source taxable income from the company's branch operations in Canada. All of the branch income is general category income. Mackinac paid Canadian income taxes of $600,000 on its branch income. Compute Mackinac's allowable foreign tax credit for 2011. Assume a U.S. corporate tax rate of 34%.