- 20 -                                         
          for 1985 before June 1985 with respect to those interest                    
          remittances.                                                                
               On its 1980 through 1986 income tax returns, petitioner                
          generally reported its interest income and withholding tax                  
          payments with respect to its Brazilian loans on a cash basis.               
          Petitioner claimed a foreign tax credit and reported grossed-up             
          interest income.  On its returns covering the period from 1980              
          through June 28, 1985, petitioner reduced the amount of foreign             
          tax credit it claimed in connection with its Brazilian loans by             
          an amount equal to the pecuniary benefit provided by the                    
          Brazilian Government to Brazilian borrowers.                                
               In its amended petition, petitioner asserted, among other              
          things, that the foreign tax credit for Brazilian taxes withheld            
          by the Central Bank otherwise allowable to it for 1980 through              
          1986 should not be reduced by the pecuniary benefit provided to             
          Brazilian borrowers.                                                        
                                       OPINION                                        
               As relevant here, sections 901(b) and 903 permit a domestic            
          corporation to receive a tax credit in the amount of any income             
          tax, or any tax paid in lieu of a tax on income, that is paid or            
          accrued during the taxable year to a foreign country.  A foreign            
          levy is a tax if it requires a compulsory payment pursuant to the           
          authority of a foreign country to levy taxes.  Sec.                         
          1.901-2(a)(2)(i), Income Tax Regs.  Credit is not allowed,                  
Page:  Previous   10   11   12   13   14   15   16   17   18   19   20   21   22   23   24   25   26   27   28   29   NextLast modified: May 25, 2011