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We have been unable to perceive any persuasive reasons why
carrybacks of excess foreign taxes should be treated differently
where an underpayment rather than an overpayment is concerned.
Petitioner has argued that, unlike other carrybacks, such as a
net operating loss carryback, a "matching" rather than an
"averaging" principle is involved. We are unimpressed. Such
"matching" stemmed, according to petitioner, from a desire to
mitigate distortions arising from differences in taxable years
and accounting methods between the United States and foreign tax
systems. We are not persuaded that such "matching" element
dictates that we provide petitioner with the relief sought
herein. The same matching principle, if applicable, would
dictate that a taxpayer was entitled to interest on an
overpayment as well as relief from interest on an unreduced
underpayment. Again, a similar argument was made by the taxpayer
in Fluor Corp. & Affiliates and rejected by the Court of Appeals
for the Federal Circuit which stated:
Even if that [matching] were the sole purpose behind
section 904(c), however, it would not answer the
question whether foreign tax carrybacks cancel the
deficiency interest that would be due on any deficiency
eliminated by the carryback. The fact that Congress
wanted to allow some room for matching foreign tax
credits with the recognition of corresponding income
under the U.S. tax system does not mean that Congress
wanted to allow taxpayers to use foreign tax carrybacks
to avoid the normal consequences of tax underpayments
in prior years. * * * [Fluor Corp. & Affiliates v.
United States, 126 F.3d at 1405.]
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