Horton Corporation is a 100 percent owned Canadian subsidiary of Cruller Corporation, a U. S. corporation. During the current year, Horton paid a dividend of C$600,000 to Cruller. The dividend qualifies for the 100 percent dividends received deduction. The dividend was subject to a withholding tax of C$30,000. Assume an exchange rate of C$1 = $1. Cruller reported U. S. source taxable income of $2,000,000 before considering the dividend received from Horton Corporation. Compute the tax consequences to Cruller as a result of this dividend. A) Taxable income of $2,600,000, net U. S. tax of $516,000, and FTC carryover of $0.
B) Taxable income of $2,600,000, net U. S. tax of $546,000, and FTC carryover of $30,000.
C) Taxable income of $2,000,000, net U. S. tax of $390,000, and FTC carryover of $0.
D) Taxable income of $2,000,000, net U. S. tax of $420,000, and FTC carryover of $0