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for refund for additional foreign tax credits for the ACT
payment. Respondent disallowed the refund.
Discussion
Section 901(a) allows a domestic corporation to claim a
foreign tax credit for taxes "deemed to have been paid under
sections 902 and 960." Section 902 provides, inter alia:
SEC. 902. DEEMED PAID CREDIT WHERE DOMESTIC
CORPORATION OWNS 10 PERCENT OR MORE OF
VOTING STOCK OF FOREIGN CORPORATION.
(a) Taxes Paid by Foreign Corporation Treated as
Paid by Domestic Corporation.--For purposes of this
subpart, a domestic corporation which owns 10 percent
or more of the voting stock of a foreign corporation
from which it receives dividends in any taxable year
shall be deemed to have paid the same proportion of
such foreign corporation's post-1986 foreign income
taxes as--
(1) the amount of such dividends
(determined without regard to section 78),
bears to
(2) such foreign corporation's post-1986
undistributed earnings.
(b) Deemed Taxes Increased in Case of Certain 2nd
and 3rd Tier Foreign Corporations.--
(1) 2nd tier.--If the foreign
corporation described in subsection (a)
(hereinafter in this section referred to as
the "1st tier corporation") owns 10-percent
or more of the voting stock of a 2nd foreign
corporation from which it receives dividends
in any taxable year, the 1st tier corporation
shall be deemed to have paid the same
proportion of such 2nd foreign corporation's
post-1986 foreign income taxes as would be
determined under subsection (a) if such 1st
tier corporation were a domestic corporation.
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