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On appeal, in Riggs IV, the Court of Appeals concluded that
the Brazilian taxes were withheld and paid by the Central Bank.
The Court of Appeals explained that the DARFs issued by the
Central Bank constituted official tax receipts of the Brazilian
Government and were entitled to a presumption of regularity. It
reasoned that respondent had failed to rely on clear and specific
evidence necessary to rebut this presumption of regularity
attaching to the DARFs. The Court of Appeals remanded the case
to us to decide whether, in determining petitioner’s creditable
amount under section 901, the withheld taxes paid by the Central
Bank should be reduced by any pecuniary benefit received by the
Central Bank. Riggs IV, 295 F.3d at 22.
We begin the task assigned to us in Riggs IV by reviewing
section 1.901-2, Income Tax Regs., which provides detailed
interpretations of the foreign tax credit provisions. Paragraphs
(a), (b), and (c) of section 1.901-2, Income Tax Regs., define an
income tax for purposes of section 901; paragraph (e) “contains
rules for determining the amount of tax paid by a person”; and
paragraph (f) “contains rules for determining by whom foreign tax
is paid.” Sec. 1.901-2(a)(1), Income Tax Regs.
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