§901 — Taxes of foreign countries and of possessions of United States
149 cases·38 followed·6 distinguished·4 questioned·1 criticized·1 overruled·99 cited—26% support
Statute Text — 26 U.S.C. §901
If the taxpayer chooses to have the benefits of this subpart, the tax imposed by this chapter shall, subject to the limitation of section 904, be credited with the amounts provided in the applicable paragraph of subsection (b) plus, in the case of a corporation, the taxes deemed to have been paid under section 960. Such choice for any taxable year may be made or changed at any time before the expiration of the period prescribed for making a claim for credit or refund of the tax imposed by this chapter for such taxable year. The credit shall not be allowed against any tax treated as a tax not imposed by this chapter under section 26(b).
Subject to the limitation of section 904, the following amounts shall be allowed as the credit under subsection (a):
In the case of a citizen of the United States and of a domestic corporation, the amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country or to any possession of the United States; and
In the case of a resident of the United States and in the case of an individual who is a bona fide resident of Puerto Rico during the entire taxable year, the amount of any such taxes paid or accrued during the taxable year to any possession of the United States; and
In the case of an alien resident of the United States and in the case of an alien individual who is a bona fide resident of Puerto Rico during the entire taxable year, the amount of any such taxes paid or accrued during the taxable year to any foreign country; and
In the case of any nonresident alien individual not described in section 876 and in the case of any foreign corporation, the amount determined pursuant to section 906; and
In the case of any person described in paragraph (1), (2), (3), or (4), who is a member of a partnership or a beneficiary of an estate or trust, the amount of his proportionate share of the taxes (described in such paragraph) of the partnership or the estate or trust paid or accrued during the taxable year to a foreign country or to any possession of the United States, as the case may be. Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the allocable amount of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on the settlor or such other person in respect of trust income.
Whenever the President finds that—
a foreign country, in imposing income, war profits, and excess profits taxes, does not allow to citizens of the United States residing in such foreign country a credit for any such taxes paid or accrued to the United States or any foreign country, as the case may be, similar to the credit allowed under subsection (b)(3),
such foreign country, when requested by the United States to do so, has not acted to provide such a similar credit to citizens of the United States residing in such foreign country, and
it is in the public interest to allow the credit under subsection (b)(3) to citizens or subjects of such foreign country only if it allows such a similar credit to citizens of the United States residing in such foreign country,
the President shall proclaim that, for taxable years beginning while the proclamation remains in effect, the credit under subsection (b)(3) shall be allowed to citizens or subjects of such foreign country only if such foreign country, in imposing income, war profits, and excess profits taxes, allows to citizens of the United States residing in such foreign country such a similar credit.
For purposes of this subpart, dividends from a DISC or former DISC (as defined in section 992(a)) shall be treated as dividends from a foreign corporation to the extent such dividends are treated under part I as income from sources without the United States.
Notwithstanding subsection (b), the amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country or possession of the United States with respect to foreign mineral income from sources within such country or possession which would (but for this paragraph) be allowed under such subsection shall be reduced by the amount (if any) by which—
the amount of such taxes (or, if smaller, the amount of the tax which would be computed under this chapter with respect to such income determined without the deduction allowed under section 613), exceeds
the amount of the tax computed under this chapter with respect to such income.
For purposes of paragraph (1), the term “foreign mineral income” means income derived from the extraction of minerals from mines, wells, or other natural deposits, the processing of such minerals into their primary products, and the transportation, distribution, or sale of such minerals or primary products. Such term includes, but is not limited to 11 So in original. Probably should be followed by a comma. that portion of the taxpayer’s distributive share of the income of partnerships attributable to foreign mineral income.
Notwithstanding subsection (b) and section 960, the amount of any income, or profits, and excess profits taxes paid or accrued during the taxable year to any foreign country in connection with the purchase and sale of oil or gas extracted in such country is not to be considered as tax for purposes of section 275(a) and this section if—
the taxpayer has no economic interest in the oil or gas to which section 611(a) applies, and
either such purchase or sale is at a price which differs from the fair market value for such oil or gas at the time of such purchase or sale.
For purposes of this chapter, any tax of a foreign country or possession of the United States which is paid or accrued with respect to any distribution from a corporation—
to the extent that such distribution is attributable to periods during which such corporation is a possessions corporation, and
if a dividends received deduction is allowable with respect to such distribution under part VIII of subchapter B, or
to the extent that such distribution is received in connection with a liquidation or other transaction with respect to which gain or loss is not recognized,
shall not be treated as income, war profits, or excess profits taxes paid or accrued to a foreign country or possession of the United States, and no deduction shall be allowed under this title with respect to any amount so paid or accrued.
For purposes of paragraph (1), a corporation shall be treated as a possessions corporation for any period during which an election under section 936 (as in effect on the day before the date of the enactment of the Tax Technical Corrections Act of 2018) applied to such corporation, during which section 931 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1976) applied to such corporation, or during which section 957(c) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) applied to such corporation.
Any income, war profits, or excess profits tax shall not be treated as a tax for purposes of this title to the extent—
the amount of such tax is used (directly or indirectly) by the country imposing such tax to provide a subsidy by any means to the taxpayer, a related person (within the meaning of section 482), or any party to the transaction or to a related transaction, and
such subsidy is determined (directly or indirectly) by reference to the amount of such tax, or the base used to compute the amount of such tax.
Notwithstanding any other provision of this part—
no credit shall be allowed under subsection (a) for any income, war profits, or excess profits taxes paid or accrued (or deemed paid under section 960) to any country if such taxes are with respect to income attributable to a period during which this subsection applies to such country, and
subsections (a), (b), and (c) of section 904 and section 960 shall be applied separately with respect to income attributable to such a period from sources within such country.
This subsection shall apply to any foreign country—
the government of which the United States does not recognize, unless such government is otherwise eligible to purchase defense articles or services under the Arms Export Control Act,
with respect to which the United States has severed diplomatic relations,
with respect to which the United States has not severed diplomatic relations but does not conduct such relations, or
which the Secretary of State has, pursuant to section 6(j)
2
2 See References in Text note below.
of the Export Administration Act of 1979, as amended, designated as a foreign country which repeatedly provides support for acts of international terrorisms.
This subsection shall apply to any foreign country described in subparagraph (A) during the period—
beginning on the later of—
January 1, 1987
, or
6 months after such country becomes a country described in subparagraph (A), and
ending on the date the Secretary of State certifies to the Secretary of the Treasury that such country is no longer described in subparagraph (A).
Sections 275 and 78 shall not apply to any tax which is not allowable as a credit under subsection (a) by reason of this subsection.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations which treat income paid through 1 or more entities as derived from a foreign country to which this subsection applies if such income was, without regard to such entities, derived from such country.
Paragraph (1) shall not apply with respect to taxes paid or accrued to a country if the President—
determines that a waiver of the application of such paragraph is in the national interest of the United States and will expand trade and investment opportunities for United States companies in such country; and
reports such waiver under subparagraph (B).
Not less than 30 days before the date on which a waiver is granted under this paragraph, the President shall report to Congress—
the intention to grant such waiver; and
the reason for the determination under subparagraph (A)(i).
In no event shall a credit be allowed under subsection (a) for any withholding tax on a dividend with respect to stock in a corporation if—
such stock is held by the recipient of the dividend for 15 days or less during the 31-day period beginning on the date which is 15 days before the date on which such share becomes ex-dividend with respect to such dividend, or
to the extent that the recipient of the dividend is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.
For purposes of this paragraph, the term “withholding tax” includes any tax determined on a gross basis; but does not include any tax which is in the nature of a prepayment of a tax imposed on a net basis.
In the case of income, war profits, or excess profits taxes deemed paid under section 853 or 960 through a chain of ownership of stock in 1 or more corporations, no credit shall be allowed under subsection (a) for such taxes if—
any stock of any corporation in such chain (the ownership of which is required to obtain credit under subsection (a) for such taxes) is held for less than the period described in paragraph (1)(A)(i), or
the corporation holding the stock is under an obligation referred to in paragraph (1)(A)(ii).
In the case of stock having preference in dividends and dividends with respect to such stock which are attributable to a period or periods aggregating in excess of 366 days, paragraph (1)(A)(i) shall be applied—
by substituting “45 days” for “15 days” each place it appears, and
by substituting “91-day period” for “31-day period”.
Paragraphs (1) and (2) shall not apply to any qualified tax with respect to any security held in the active conduct in a foreign country of a business as a securities dealer of any person—
who is registered as a securities broker or dealer under section 15(a) of the Securities Exchange Act of 1934,
who is registered as a Government securities broker or dealer under section 15C(a) of such Act, or
who is licensed or authorized in such foreign country to conduct securities activities in such country and is subject to bona fide regulation by a securities regulating authority of such country.
For purposes of subparagraph (A), the term “qualified tax” means a tax paid to a foreign country (other than the foreign country referred to in subparagraph (A)) if—
the dividend to which such tax is attributable is subject to taxation on a net basis by the country referred to in subparagraph (A), and
such country allows a credit against its net basis tax for the full amount of the tax paid to such other foreign country.
The Secretary may prescribe such regulations as may be appropriate to carry out this paragraph, including regulations to prevent the abuse of the exception provided by this paragraph and to treat other taxes as qualified taxes.
For purposes of this subsection, the rules of paragraphs (3) and (4) of section 246(c) shall apply.
If a person’s holding period is reduced by reason of the application of the rules of section 246(c)(4) to any contract for the bona fide sale of stock, the determination of whether such person’s holding period meets the requirements of paragraph (2) with respect to taxes deemed paid under section 960 shall be made as of the date such contract is entered into.
Sections 275 and 78 shall not apply to any tax which is not allowable as a credit under subsection (a) by reason of this subsection.
In no event shall a credit be allowed under subsection (a) for any withholding tax (as defined in subsection (k)) on any item of income or gain with respect to any property if—
such property is held by the recipient of the item for 15 days or less during the 31-day period beginning on the date which is 15 days before the date on which the right to receive payment of such item arises, or
to the extent that the recipient of the item is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.
This paragraph shall not apply to any dividend to which subsection (k) applies.
Paragraph (1) shall not apply to any qualified tax with respect to any property held in the active conduct in a foreign country of a business as a dealer in such property.
For purposes of subparagraph (A), the term “qualified tax” means a tax paid to a foreign country (other than the foreign country referred to in subparagraph (A)) if—
the item to which such tax is attributable is subject to taxation on a net basis by the country referred to in subparagraph (A), and
such country allows a credit against its net basis tax for the full amount of the tax paid to such other foreign country.
For purposes of subparagraph (A), the term “dealer” means—
with respect to a security, any person to whom paragraphs (1) and (2) of subsection (k) would not apply by reason of paragraph (4) thereof, and
with respect to any other property, any person with respect to whom such property is described in section 1221(a)(1).
The Secretary may prescribe such regulations as may be appropriate to carry out this paragraph, including regulations to prevent the abuse of the exception provided by this paragraph and to treat other taxes as qualified taxes.
The Secretary may by regulation provide that paragraph (1) shall not apply to property where the Secretary determines that the application of paragraph (1) to such property is not necessary to carry out the purposes of this subsection.
Rules similar to the rules of paragraphs (5), (6), and (7) of subsection (k) shall apply for purposes of this subsection.
Holding periods shall be determined for purposes of this subsection without regard to section 1235 or any similar rule.
In the case of a covered asset acquisition, the disqualified portion of any foreign income tax determined with respect to the income or gain attributable to the relevant foreign assets—
shall not be taken into account in determining the credit allowed under subsection (a), and
in the case of a foreign income tax paid by a foreign corporation, shall not be taken into account for purposes of section 960.
For purposes of this section, the term “covered asset acquisition” means—
a qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies,
any transaction which—
is treated as an acquisition of assets for purposes of this chapter, and
is treated as the acquisition of stock of a corporation (or is disregarded) for purposes of the foreign income taxes of the relevant jurisdiction,
any acquisition of an interest in a partnership which has an election in effect under section 754, and
to the extent provided by the Secretary, any other similar transaction.
For purposes of this section—
The term “disqualified portion” means, with respect to any covered asset acquisition, for any taxable year, the ratio (expressed as a percentage) of—
the aggregate basis differences (but not below zero) allocable to such taxable year under subparagraph (B) with respect to all relevant foreign assets, divided by
the income on which the foreign income tax referred to in paragraph (1) is determined (or, if the taxpayer fails to substantiate such income to the satisfaction of the Secretary, such income shall be determined by dividing the amount of such foreign income tax by the highest marginal tax rate applicable to such income in the relevant jurisdiction).
For purposes of subparagraph (A)(i)—
The basis difference with respect to any relevant foreign asset shall be allocated to taxable years using the applicable cost recovery method under this chapter.
Except as otherwise provided by the Secretary, in the case of the disposition of any relevant foreign asset—
the basis difference allocated to the taxable year which includes the date of such disposition shall be the excess of the basis difference with respect to such asset over the aggregate basis difference with respect to such asset which has been allocated under clause (i) to all prior taxable years, and
no basis difference with respect to such asset shall be allocated under clause (i) to any taxable year thereafter.
The term “basis difference” means, with respect to any relevant foreign asset, the excess of—
the adjusted basis of such asset immediately after the covered asset acquisition, over
the adjusted basis of such asset immediately before the covered asset acquisition.
In the case of a relevant foreign asset with respect to which the amount described in clause (i)(II) exceeds the amount described in clause (i)(I), such excess shall be taken into account under this subsection as a basis difference of a negative amount.
In the case of a covered asset acquisition described in paragraph (2)(A), the covered asset acquisition shall be treated for purposes of this subparagraph as occurring at the close of the acquisition date (as defined in section 338(h)(2)).
For purposes of this section, the term “relevant foreign asset” means, with respect to any covered asset acquisition, any asset (including any goodwill, going concern value, or other intangible) with respect to such acquisition if income, deduction, gain, or loss attributable to such asset is taken into account in determining the foreign income tax referred to in paragraph (1).
For purposes of this section, the term “foreign income tax” means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United States.
Sections 275 and 78 shall not apply to any tax which is not allowable as a credit under subsection (a) by reason of this subsection.
The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection, including to exempt from the application of this subsection certain covered asset acquisitions, and relevant foreign assets with respect to which the basis difference is de minimis.
For deductions of income, war profits, and excess profits taxes paid to a foreign country or a possession of the United States, see sections 164 and 275.
For right of each partner to make election under this section, see section 703(b).
For right of estate or trust to the credit for taxes imposed by foreign countries and possessions of the United States under this section, see section 642(a).
For reduction of credit for failure of a United States person to furnish certain information with respect to a foreign corporation or partnership controlled by him, see section 6038.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.901-1 Allowance of credit for foreign income taxes
- Treas. Reg. §Treas. Reg. §1.901-1(a) In general.
- Treas. Reg. §Treas. Reg. §1.901-1(b) Limitations.
- Treas. Reg. §Treas. Reg. §1.901-1(c) Deduction denied if credit claimed—(1) In general.
- Treas. Reg. §Treas. Reg. §1.901-1(d) Period during which election can be made or changed—(1) In general.
- Treas. Reg. §Treas. Reg. §1.901-1(e) Joint return.
- Treas. Reg. §Treas. Reg. §1.901-1(f) Taxes against which credit is allowed.
- Treas. Reg. §Treas. Reg. §1.901-1(g) Taxpayers to whom credit not allowed.
- Treas. Reg. §Treas. Reg. §1.901-1(h) Taxpayers denied credit in a particular taxable year.
- Treas. Reg. §Treas. Reg. §1.901-1(i) Dividends from a DISC treated as foreign.
- Treas. Reg. §Treas. Reg. §1.901-1(j) Applicability date.
- Treas. Reg. §Treas. Reg. §1.901-2 Income, war profits, or excess profits tax paid or accrued
- Treas. Reg. §Treas. Reg. §1.901-2(a) Definition of foreign income tax—(1) Overview and scope.
- Treas. Reg. §Treas. Reg. §1.901-2(b) Net gain requirement—(1) In general.
- Treas. Reg. §Treas. Reg. §1.901-2(c) §1.901-2(c)
- Treas. Reg. §Treas. Reg. §1.901-2(d) Separate levies—(1) In general.
- Treas. Reg. §Treas. Reg. §1.901-2(e) Amount of foreign income tax that is creditable—(1) In general.
- Treas. Reg. §Treas. Reg. §1.901-2(f) Taxpayer—(1) In general.
- Treas. Reg. §Treas. Reg. §1.901-2(g) Definitions.
- Treas. Reg. §Treas. Reg. §1.901-2(h) Applicability dates.
- Treas. Reg. §Treas. Reg. §1.901-2(i) Resident.
- Treas. Reg. §Treas. Reg. §1.901-2(v) Exhaustion of remedies.
- Treas. Reg. §Treas. Reg. §1.901-2(x) Example 10: Different taxable base for class of taxpayers—(A) Facts.
- Treas. Reg. §Treas. Reg. §1.901-2A Dual capacity taxpayers
- Treas. Reg. §Treas. Reg. §1.901-2A(a) Application of separate levy rules as applied to dual capacity taxpayers—(1) In general.
149 Citing Cases
On the basis of our holding on the issue before us, we need not decide tha dispute.
Of relevance here, section 27 provides a credit for “[t]he amount of taxes imposed by foreign countries * * * against the tax imposed by this chapter to the extent provided in section 901.” Section 901 provides a foreign tax credit against regular tax.
We held that petitioner had calculated its Mexi- can tax liabilities "'in a manner that [wa]s consistent with a reasonable interpreta- tion and application' ofMexican law" so as to minimize petitioner's reasonably expected liability for Mexican tax.
The foreign taxes that are presently creditable pursuant to section 901, specifically, income, war profits, and excess profits taxes, have remained unchanged and are the same taxes that were creditable in 1918 .
On the basis of the record, we hold that petitioner has not met her burden of proving - 29 - that the tax she claims was paid to the Government of Russia was in fact paid.
- 3 - tax credits pursuant to section 901(a) for certain U.K.
- 92 - We hold that .pursuant to section 4 .
901(a) (2012)), Pub. L. No. 112-240, sec. 901, 126 Stat. at 2370. The applicability ofthe sequestration and the sequestration percentage are determined on the basis ofthe Government fiscal year that the award is paid. The WBO informed petitioner that the sequestration would have resulted in a $15,319 reduction in his award ifit had been paid during the Government's 2017 fiscal year, ended September 30, 2017. The Office of Management and Budget (OMB) calculates the sequestration percentage for ea
rial income tax returns with the Virgin Islands Bureau ofInternal Revenue for that year. Ps now concede that they were not bona fide residents ofthe Virgin Islands for 2001. They seek to credit against their U.S. tax liabilities for that year, under I.R.C. sec. 901, payments made with their Virgin Islands returns and estimated payments they made to the U.S. Treasury for 2001 that were later "covered into" the Virgin Islands Treasury under I.R.C. sec. 7654. Ideld: Ps are not allowed to credit aga
Petitioners are not allowed a credit, either under section 901 or under the Income Tax Treaty, ifSSA section 317(b)(4) precludes such a credit. The question is not whether CSG and CRDS are covered by the Income Tax Treaty, but whether SSA section 317(b)(4) bars a credit "notwithstanding any other provision oflaw."¹² In sum, we find that the postratification understanding ofthe French Government, to the extent discernible, provides no meaningful support for peti- tioners' position. Where, as here
yment of social debt or CRDS) — are creditable taxes for Federal income tax purposes. The parties have filed cross-motions for summary judgment on this question. The parties agree that CSG and CRDS satisfy the usual standards for creditability under section 901. The question we must answer is whether section 317(b)(4) of the Social Security Amendments of 1977 (SSA), Pub. L. No. 95-216, 91 Stat. at 1540, nevertheless precludes credits for these taxes. This depends on whether CSG and CRDS “amend o
dit or refund relates to an overpayment attributable to any taxes paid or accrued to any foreign country or to any possession of the United States for which credit is allowed against the tax imposed by subtitle A in accordance with the provisions of section 901 or the provisions of any treaty to which the United States is a party, in lieu of the 3-year period of limitation prescribed in subsection (a), the period shall be 10 years from the date prescribed by law for filing the return for the yea
horized to credit Egyptian taxes paid on behalf of S against its income tax liability. Held, further, there was no refund of Egyptian taxes to or for the account of P. Held, further, E should be included in the term "foreign country" for purposes of sec. 901, - 2 - I.R.C., and the regulations thereunder, including Example (3) of sec. 1.901-2(f)(2)(ii), Income Tax Regs. Held, further, there was no indirect subsidy to P with respect to E's credit practice. Held, further, the requirements of foreig
TES TAX COURT RENEE VENTO, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent* Docket Nos. 992-06, 993-06, Filed February 4, 2019. 1168-06. Following our previous Opinion holding that Ps are not entitled to foreign tax credits under I.R.C. sec. 901 for certain amounts paid to the U.S. Virgin Islands, the parties were ordered to submit computa- tions for entry ofdecision under Tax Court Rule 155. In their compu- tations Ps took the position that the amounts at issue were deductib
TES TAX COURT RENEE VENTO, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent* Docket Nos. 992-06, 993-06, Filed February 4, 2019. 1168-06. Following our previous Opinion holding that Ps are not entitled to foreign tax credits under I.R.C. sec. 901 for certain amounts paid to the U.S. Virgin Islands, the parties were ordered to submit computa- tions for entry ofdecision under Tax Court Rule 155. In their compu- tations Ps took the position that the amounts at issue were deductib
TES TAX COURT RENEE VENTO, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent* Docket Nos. 992-06, 993-06, Filed February 4, 2019. 1168-06. Following our previous Opinion holding that Ps are not entitled to foreign tax credits under I.R.C. sec. 901 for certain amounts paid to the U.S. Virgin Islands, the parties were ordered to submit computa- tions for entry ofdecision under Tax Court Rule 155. In their compu- tations Ps took the position that the amounts at issue were deductib
The first issue is whether petitioner is entitled to foreign tax credits under section 901 claimed in connection with a Structured Trust Advantaged Repackaged Securities transaction (STARS transaction or STARS).
e tax liability for “the amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country”. We must decide whether the windfall tax constitutes a creditable income or excess profits tax under section 901. In Phillips Petroleum Co. v. Commissioner, 104 T.C. 256, 283-284 (1995), we described the background, purpose, and function of the foreign tax credit provisions of the Internal Revenue Code as follows: The foreign tax credit provisions w
Consequently, we hold that petitioner is not entitled to foreign tax credits under section 901 for the taxable years in issue.
t provisions operate on a mutually exclusive basis with respect to a particular tax year. See sec. 275(a)(4)(A). A taxpayer is precluded from deducting foreign - 7 - taxes for a given year if he or she “chooses to take to any extent the benefits of section 901”. Id. Nonetheless, under section 901(a) and section 1.901-1(d), Income Tax Regs., an election to claim either the deduction or the credit may be made or changed at any time before the expiration of the special 10- year period of limitation
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
t provisions operate on a mutually exclusive basis with respect to a particular tax year. See sec. 275(a)(4)(A). A taxpayer is precluded from deducting foreign - 7 - taxes for a given year if he or she “chooses to take to any extent the benefits of section 901”. Id. Nonetheless, under section 901(a) and section 1.901-1(d), Income Tax Regs., an election to claim either the deduction or the credit may be made or changed at any time before the expiration of the special 10- year period of limitation
REVENUE, Respondent Docket Nos. 23331-95, 16692-97,. Filed November 2, 1999. Held: Petroleum revenue tax paid by petitioners to the United Kingdom was not paid in exchange for specific economic benefits and constitutes a creditable foreign tax under sec. 901, I.R.C. Robert L. Moore II, Jay L. Carlson, Bradford J. Anwyll, Kevin Lee Kenworthy, Patrick James Thornton, Richard Steven Klimczak, Susan Ann Friedman, and David B. Blair, for petitioners. Allan E. Lang and Raymond L. Collins, for responde
ITY --- Colvin, Judge: Respondent determined deficiencies in petitioner’s Federal income tax of $563,127 for 1979, $10,998,770 for 1980, and $1,794,073 for 1981. The sole issue for decision is whether the Ontario Mining Tax (OMT) is creditable under section 901. We hold that it is. Unless otherwise indicated, section references are to the Internal Revenue Code in effect for the years in issue. Rule references are to the Tax Court Rules of Practice and Procedure. FINDINGS OF FACT Some of the fact
§§ 901, 902, and 960, even though DP’s partners received no distributions from DP in 2007 and 2008. Held: Under the plain text of I.R.C. §§ 902 and 960, in the circumstances here, P is not allowed foreign tax credits for income taxes paid or accrued by the lower tier of foreign corporations that were owned by DP. Served 02/24/25 2 ————— Rajiv Madan
tion shall be allowed for the following taxes: . . . . (4) Income, war profits, and excess profits taxes imposed by the authority of any foreign country or possession of the United States if the taxpayer chooses to take to any extent the benefits of section 901. The Commissioner claims that permitting the deduction of section 78 dividends violates this rule because it “would be an effective deduction for the amount of ‘the taxes deemed to be paid’ by [Varian] under section 78 and other Code sect
r for which a U.S. person does not file the required information return.5 The other penalty available for failure to file the information return is under section 6038(c). Section 6038(c)(1)(A) reduces the amount of foreign tax credit available under section 901. The Commissioner may impose both the section 6038(b)(1) penalty and the section 6038(c) penalty, though a coordination clause reduces the section 6038(c) penalty by the amount of the section 6038(b) penalty. § 6038(c)(3). A U.S. person m
and that the recommended award percentage was 1%, subject to a modest reduction under the Budget Control Act of 2011, Pub. L. No. 112-25, §§ 101–103, 125 Stat. 240, 241–46, as amended by the American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, § 901, 126 Stat. 2313, 2370. The Report cited section 7623(b)(2) to justify the amount of the award and did not analyze the claim numbers individually. Ms. McCrory timely filed the Petition to commence this case. In the Answer, the Commissioner affir
ndatory spending cuts across most government programs and agencies during the budgetary process. Budget Control Act of 2011, Pub. L. No. 112-25, §§ 101–103, 125 Stat. 240, 241–46, amended by American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, § 901, 126 Stat. 2313, 2370 (codified as amended at 2 U.S.C. § 901(a) (2012)). The applicability of the sequestration and the sequestration percentage are based on the government fiscal year when the award is paid, with the procedures for this calcul
“[a]ny person required to collect, truthfully account for, and pay over any tax imposed by this title” shall be liable for the TFRP. Congress added section 6672(b)(1) to the Code in 1996 as part of The Taxpayer Bill of Rights 2, Pub. L. No. 104-168, § 901, 110 Stat. 1452, 1465. That section requires that “[n]o [TFRP] shall be imposed . . . unless the Secretary notifies the taxpayer in writing . . . that the taxpayer shall be subject to an assessment of such penalty.” § 6672(b)(1). In other words
Of particular relevance to this case is another domestic law provision, section 911(a). It permits qualified individuals to elect to exclude foreign earned income from their gross incomes and treats that income as exempt from U.S. federal income taxation.3 In addition to providing relief through domestic law, the United States often a
not conclude the WBO’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law in making this determination. See Treas. Reg. § 301.7623-4(c)(ii). Petitioner does not Relief Act of 2012, Pub. L. No. 112-240, § 901, 126 Stat. 2313, 2370 (codified as amended at 2 U.S.C. § 901(a) (2012)). The applicability of the sequestration and the sequestration percentage are determined on the basis of the government fiscal year when the award is paid. The OMB calculate
The purpose of section 901 is to provide relief from U.S.
It states that petitioners “paid or accrued foreign income taxes to Italy and various other countries eligible for foreign tax credit under section 901 of the Internal Revenue Code as follows”.
Section 45B(d) specifically provides that "[t]his section shall not apply to a taxpayer for any taxable year ifsuch taxpayer elects to have this section not apply for such taxable year." (Emphasis added.) While S corporations are generally not considered to be taxpayers, employment taxes are the liabilities ofthe employer, which is the tax
Section 45B(d) specifically provides that "[t]his section shall not apply to a taxpayer for any taxable year ifsuch taxpayer elects to have this section not apply for such taxable year." (Emphasis added.) While S corporations are generally not considered to be taxpayers, employment taxes are the liabilities ofthe employer, which is the tax
taxpayer's closing agreement stated that the repatriation would be free ofFederal income tax consequences, we allowed the taxpayer a section 901 foreign tax credit with respect to the entire Swiss dividend tax.
Gereneser Section 901 allows taxpayers a foreign tax credit for foreign income, war profits, and excess profits taxes they have paid or accrued during the taxable 3Rule 142(a); Welch v.
Foreign Tax Credit Section 901 allows taxpayers a foreign tax credit for foreign income, war profits, and excess profits taxes they have paid or accrued during the taxable 54(...continued) has not been permitted a tax deduction for its payment.").
The taxpayer claimed a foreign tax credit under section 901 for the foreign tax paid on the dividend attributable to the principal and interest.
The taxpayer claimed a foreign tax credit under section 901 for the foreign tax paid on the dividend attributable to the principal and interest.
taxation; (2) whetherpursuant to section 911 she is entitled to a larger foreign earned income exclusion than respondent has allowed; and (3) whetherpursuantto section 901 she is entitled to any amount offoreign tax credit.
citizen but resident of France, on all or a portion of her income; (2) whether petitioner is entitled to exclude all or a portion of her income under section 911; (3) whether petitioner is entitled to a credit under section 901 for all or a portion of the taxes paid to France; and (4) whether petitioner is liable for the accuracy-related penalty under section 6662.
arately stated, and (2) the following deductions shall not be allowed to the partnership: (A) the deductions for personal exemptions provided in section 151, (B) the deduction for taxes provided in section 164(a) with respect to taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States, (continued...) - 11 - income.4 A partnership itself pays no taxes, sec.
Statutory Background Pursuant to section 904(a), the amount of foreign tax credit allowable under section 901 may not exceed the same proportion of the tax against which such credit is claimed which the taxpayer’s taxable income from sources without the United States bears to its entire taxable income for the same taxable year.
Statutory Background Pursuant to section 904(a), the amount of foreign tax credit allowable under section 901 may not exceed the same proportion of the tax against which such credit is claimed which the taxpayer’s taxable income from sources without the United States bears to its entire taxable income for the same taxable year.
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
he payments made directly to Ps are to be characterized as compensation for services performed within the United States. Hence, the amounts are not to be treated as foreign source income for purposes of calculating the credit for foreign taxes under sec. 901, I.R.C. Held, further, the payments made to the partnership were not properly reported as partnership income. They are not to be allocated as income to the corporate P. Like the remittances above, these payments are to be characterized as co
Section 901 allows a taxpayer who so elects a credit, subject to the limitation of section 904, for the amounts of certain "taxes paid or accrued during the taxable year to any - 5 - foreign country or to any possession of the United States", plus those taxes deemed to have been paid under sections 902 and 960. Sec. 901(a) and (b)(1). The purpose
Section 901 allows a taxpayer who so elects a credit, subject to the limitation of section -904, for the amounts of certain “taxes paid or accrued during the taxable year to any foreign country or to any possession of the United States”, plus those taxes deemed to have been paid under sections 902 and 960. Sec. 901(a) and (b)(1). The purpose of sec
901 (1994), claims paid. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to Tax Court Rules of Practice and Procedure. Background The material facts have been stipulated, and the stipulated facts are incorporated herein by this reference. The parti
The dispute involves petitioner’s entitlement to foreign tax credit under section 901 for Brazilian taxes withheld on interest income petitioner received, during the years 1980 through 1986, as a result of its loans to Brazilian borrowers.
Introduction At issue here is the allocation and apportionment of certain State taxes between domestic and foreign source gross income. Resolution of that issue will determine the extent to which petitioners may take a credit for foreign taxes under section 901. The amount of credit that may be taken under section 901 is limited by section 904. Section 904 limits the amount of credit that may be taken to the amount of foreign tax that bears the same ratio to the tax against which the credit is b