Which of the following statements regarding the translation of foreign income taxes is true?
a. Translation of foreign taxes into U.S. dollars helps manage the U.S. balance of trade.
b. Foreign taxes are translated into U.S. dollars only when such translation provides a tax benefit to the taxpayer.
c. Foreign taxes typically are paid in a foreign currency and, thus, must be converted to U.S. dollars when used as a FTC on a U.S. return.
d. Translation of foreign taxes into U.S. dollars encourages foreign corporations to set up operations in the United States.
c
RATIONALE: If a taxpayer wishes to claim a FTC on a U.S. return, the foreign taxes must be converted into U.S. dollars.
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