The foreign tax credit is especially valuable when a U.S. business earns income in a country whose income tax rates exceed those of the United States.

List five countries whose tax rates on business income exceed those of the United States, and five where the corresponding U.S. rates are higher.

Teal, Inc., owns two warehouses that were placed in service before 1987. Accelerated depreciation for 2010 on Warehouse A is $36,000 (straight-line depreciation would have been $30,000). On Warehouse B, accelerated depreciation was $16,000 (straight-line depreciation would have been $20,000).

What is the amount of Teal’s tax preference for excess depreciation in 2010?

Parrot, Inc., receives tax-exempt interest of $20,000 on bonds that are classified as private activity bonds. The bonds were issued in 2007. The corporation appropriately excludes the $20,000 from its gross income for regular income tax purposes under § 103(a) and § 103(b)(1). Parrot has asked you for advice on the treatment of the $20,000 for AMT purposes.

Find the Code Section that addresses the AMT treatment for private activity bond interest.

Provide Parrot with the advice it has requested.


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