IRS Found to Wrongly Deny Foreign Tax Credit to Americans Abroad

The IRS improperly denied a foreign tax credit to an American couple living in France, a court ruled, finding that an income tax treaty between the US and France allows for foreign tax credits to apply to the net investment income tax imposed as part of Obamacare.

The opinion from the US Court of Federal Claims, sealed Sept. 13 but made public Monday, found that the denial went against the treaty language by denying the credits on taxed capital gains paid by Matthew and Katherine Christensen, an American couple living in France.

“It is one thing for a taxpayer to ...