A US Corporation pays $20,000 in foreign income taxes on $80,000 of foreign source income. The US corporate tax rate is 21%. The corporation's total taxable income is $200,000. What is the Foreign Tax Credit (FTC) limitation?

1. Calculate US Tax before credit: $200,000 * 21% = $42,000.<br/>2. Calculate Limitation Fraction: Foreign Source Income / Total Worldwide Income = $80,000 / $200,000 = 0.40.<br/>3. Calculate Limit: Total US Tax * Fraction = $42,000 * 0.40 = $16,800.<br/>4. Compare to Tax Paid ($20,000). Allowable credit is lesser ($16,800).