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The purpose of the foreign tax credit is to "mitigate the
evil of double taxation" of domestic corporations on income from
foreign sources. Burnet v. Chicago Portrait Co., 285 U.S. 1, 7
(1932); New York & Honduras Rosario Mining Co. v. Commissioner,
168 F.2d 745, 747 (2d Cir. 1948), revg. and remanding 8 T.C. 1232
(1947). A credit against U.S. income tax is, in effect, an
exemption from taxation, and is dependent upon legislative grace.
Keasbey & Mattison Co. v. Rothensies, 133 F.2d 894, 898 (3d Cir.
1943). A taxpayer who claims a foreign tax credit must show that
it clearly comes within the statute that allows the credit. Id.
Petitioner bears the burden of proof. Rule 142(a). The “reaches
of the word ‘income’ in section 901(b)(1) have been the subject
of a long and tortuous history” in terms of legislative
background, the decided cases, and respondent's rulings, which
history is “permeated” with “vagaries, confusion, and * * *
contradictions”. Bank of America Natl. Trust & Sav. Association
v. Commissioner, 61 T.C. 752, 759 (1974), affd. without published
2(...continued)
Sec. 901(b). Amount Allowed.--Subject to the
limitation of section 904, the following amounts shall
be allowed as the credit under subsection (a):
(1) Citizens and domestic corporations.--In the
case of a citizen of the United States and of a
domestic corporation, the amount of any income,
war profits, and excess profits taxes paid or
accrued during the taxable year to any foreign
country or to any possession of the United States
* * *
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