- 2 - On its income tax returns for 1980 through 1986, P claimed a foreign tax credit under sec. 901, I.R.C., for the purported withholding tax payments made by the Central Bank and other Brazilian borrowers on their net loan interest remittances to P. 1. Held: The withholding tax paid by non-tax- immune Brazilian borrowers is potentially creditable to P but must be reduced, under sec. 4.901-2(f)(3)(ii), Temporary Income Tax Regs., 45 Fed. Reg. 75653 (Nov. 17, 1980), and sec. 1.901-2(e)(3)(ii), Income Tax Regs., by the pecuniary benefit the borrowers received from the Brazilian Government. Nissho Iwai Am. Corp. v. Commissioner, 89 T.C. 765 (1987); Norwest Corp. v. Commissioner, T.C. Memo. 1992-282, affd. 69 F.3d 1404 (8th Cir. 1995); Continental Ill. Corp. v. Commissioner, T.C. Memo. 1988-318, affd. without published opinion sub nom. Citizens & S. Corp. & Subs. v. Commissioner, 919 F.2d 1492 (11th Cir. 1990), affd. in part and revd. in part 998 F.2d 513 (7th Cir. 1993), followed. 2. Held, further: P is not legally liable for Brazilian tax on the Brazilian restructuring debt interest remittances it received from the Central Bank. Under Brazilian law, P was not required to pay Brazilian tax, and neither it nor the Central Bank had a legal liability to pay the withholding tax. The purported Central Bank withholding tax payments are not creditable to P because these purported payments were noncompulsory amounts and not a tax to Brazil. Sec. 1.901-2(e)(1), (5), Income Tax Regs. Joel V. Williamson, Thomas C. Durham, Scott M. Stewart, Richard M. Timmel, Patricia Anne Flaming, and Kim Marie Boylan, for petitioner. Theodore J. Kletnick, William G. Merkle, Diane P. Thaler, Paul S. Manning, Rajiv Madan, Mary Ann Amodeo, and Janice E. Lamartine, for respondent.Page: 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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