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which it applies.3 Under the regulations, that standard is met
"if and only if the tax, judged on the basis of its predominant
character" meets specified realization, gross receipts, and net
income requirements. Sec. 1.901-2(b)(1), Income Tax Regs. The
regulations provide in part as follows:
(b) Net gain--(1) In general. A foreign tax is
likely to reach net gain in the normal circumstances in
which it applies if and only if the tax, judged on the
basis of its predominant character, satisfies each of
the realization, gross receipts, and net income
requirements set forth in paragraphs (b)(2), (b)(3) and
(b)(4), respectively, of this section.
Sec. 1.901-2(b)(1), Income Tax Regs.
Respondent concedes that the OMT meets the realization and
gross receipts requirements but contends that it does not meet
the net income requirement of section 1.901-2(b)(4), Income Tax
Regs. Thus, for present purposes the OMT is creditable,
according to section 1.901-2(b)(1), Income Tax Regs., "if and
only if" it meets the net income requirement.
A foreign tax meets the net income requirement of section
1.901-2(b)(4), Income Tax Regs.,4 if, judged on the basis of its
3This standard was first used in Bank of America Natl. Trust
& Sav. Association v. United States, 198 Ct. Cl. 263, 459 F.2d
513, 517-518 (1972). One commentator said that "Fortunately, the
regulations provide specific tests for determining whether the
general Bank of America standard is satisfied." Dolan, "General
Standards of Creditability Under Sections 901 and 903 Final
Regulations -- New Words, Old Concepts”, 13 Tax Mgt. Intl. J.
(BNA) 167, 169 (1984).
4 Sec. 1.901-2(b)(4), Income Tax Regs., provides:
(continued...)
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