- 7 - basis of Bowater Inc. v. Commissioner, 101 T.C. 207 (1993), that petitioner may net interest income against interest expense in determining the amount of interest deduction to be allocated and apportioned in computing combined taxable income under section 936 and section 1.861-8(e)(2), Income Tax Regs. See also General Portland Cement Co. v. United States, 628 F.2d 321 (5th Cir. 1980). II. Discussion A. Section 936 and Section 1.936-6(b)(1) Q&A 1 & 12, Income Tax Regs. Under the statutory scheme of section 936, a U.S. corporation, such as CRI, which elects the application of section 936 and meets certain requirements with respect to operating in a possession, is entitled to a credit against the U.S. tax on certain possession-related income. Section 936 provides the following: SEC. 936(a). Allowance of Credit.-- (1) In General.-- * * * if a domestic corporation elects the application of this section * * * there shall be allowed as a credit against the tax imposed by this chapter an amount equal to the portion of the tax which is attributable to the sum of-- (A) the taxable income, from sources without the United States, from-- (i) the active conduct of a trade or business within a possession of the United States, or (ii) the sale or exchange of substantially all of the assets used by thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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