Case: Taxpayer Not Entitled to Foreign Tax Credits (T.C.) (IRC §902)

The U.S. Tax Court held that the taxpayer was not entitled to foreign tax credits for taxes paid by lower-tier controlled foreign corporations (CFCs) owned through a domestic partnership, affirming the IRS’s determination. Taxpayer, a domestic corporation, was the ultimate parent of two tiers of CFCs, with a domestic partnership interposed between the tiers. The domestic partnership included in its income the subpart F income and section 956 amounts of the lower-tier CFCs, but made no distributions to its partners. The court held that under sections 902 and 960, the taxpayer could not claim foreign tax credits for taxes paid ...