Week3 Assignment Example | Topics and Well Written Essays - 250 words - 2

Week3 - Assignment Example Attempt to use laps between foreign tax law and U.S to effectively duplicate tax benefits. The treasury should address this lop holes by use of existing laws and by legislation of bylaws to cub this practice. (Albrecht, Albrecht, 2008). A U.S citizen can reduce or minimize U.S. tax obligations by claiming tax credit on foreign taxes on income. This is subjected to the following condition; the maximum tax credit payable must not exceed the amount of tax that would be payable if this income tax was taxed using domestic income tax rate. Any excess tax paid to a foreign county is not claimable. For example if a U.S citizen X earns $9,000 foreign annual income and this is the only of taxable income for X. And x had paid 800 as tax on this income. His domestic tax liability will be 900 less 800 tax credit. For example if a U.S citizen X earns $9,000 foreign annual income and this is the only of taxable income for X. And x had paid 800 as tax on this income. His domestic tax liability will be 900 less 800 tax credit. However, is this tax credit is eliminated; the government will earn an additional