Texasgulf Inc. and Subsidiaries, as Successor in Interest to Texasgulf Inc. and Subsidiaries - Page 1

                                   107 T.C. No. 5                                     

                               UNITED STATES TAX COURT                                

                         TEXASGULF INC. AND SUBSIDIARIES, AS                          
                       SUCCESSOR IN INTEREST TO TEXASGULF INC.                        
                           AND SUBSIDIARIES, Petitioner v.                            
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 15528-89.            Filed September 9, 1996.               
                    Under the Ontario Mining Tax (OMT), mine operators                
               are generally liable for a tax on gross receipts less                  
               deductions for several expenses and a processing                       
               allowance.  P paid the OMT and claimed a foreign tax                   
               credit under sec. 901, I.R.C.                                          
                    P and R agree that sec. 1.901-2, Income Tax Regs.,                
               applies to the years at issue.  R concedes that the OMT                
               is a tax and that it meets realization and gross income                
               requirements imposed by those regulations but contends                 
               that the OMT does not meet the net income requirement.                 
               Sec. 1.901-2(b)(4), Income Tax Regs.                                   
                    A foreign tax meets the net income requirement if                 
               it meets any one of three tests.  Under one of those                   

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