U.S. Tax Court Denies Deduction for Indirectly Owned CFC Dividends, Clarifies FTC Computation

The U.S. Tax Court, in a summary decision, held that the taxpayer was not entitled to claim a dividends received deduction under I.R.C. §245A for Section 78 dividends attributable to lower-tier controlled foreign corporations (CFCs) because the direct ownership holding period requirement of I.R.C. §246(c) was not satisfied. The court determined that indirect ownership through intermediate foreign subsidiaries does not meet the statutory requirement for the deduction. The court also ruled that, for purposes of calculating the foreign tax credit disallowance under I.R.C. §245A(d), the net Section 965 inclusion must be determined by reducing the Section 965(a) inclusion amount by ...