File Form 1116, Foreign Tax Credit, to apply for the foreign tax credit if you are an individual, estate, or trust and have paid or accrued certain foreign taxes in a foreign country or the U.S. UU. You can choose to take the amount of any qualified foreign tax paid during the year as a credit or as a deduction. To choose the deduction, you must itemize the deductions on Schedule A (Form 1040).
To choose the foreign tax credit, you must generally complete Form 1116 and attach it to your Form 1040, Form 1040-SR, or Form 1040-NR. You must choose between the foreign tax credit or the itemized deduction of all foreign taxes paid or accrued during the year. In the case of a United States citizen and a domestic corporation, the amount of any income tax, war profits, and excess profits paid or accrued during the tax year to any foreign country or possession of the United States; and in the case of a resident of the United States and in the case of a person who is a bona fide resident of Puerto Rico for the entire tax year, the amount of such taxes paid or accrued taxed during the tax year on any possession of the United States; and in the case of a foreign resident of the United States and, in the case of a foreign person who is a bona fide resident of Puerto Rico throughout the tax year, the amount of such taxes paid or accrued during the tax year in any foreign country; and in the case of any non-resident foreign person not described in section 876 and in the case of any foreign corporation, the amount determined in accordance with section 906; and in the case of any person described in paragraph (, (, (or (, if you are a member of a company or the beneficiary of an estate or trust), the amount of its proportional share of the taxes (described in that paragraph) of the company or of the estate or trust paid or accumulated during the tax year to a foreign country or to any possession of the United States, as the case may be. Under the rules or regulations prescribed by the Secretary, in the case of any foreign trust in which the trustor or other person is treated as the owner of any part of the trust under subpart E, if not in the case of section 672 (f), the allocable amount of any income, war profit, and excess profit tax imposed by any foreign country or possession of the United States on the trustor or that other person with respect to the trust's income.
For the purposes of this subpart, dividends from a DISC or a former DISC (as defined in section 992 (a)) will be treated as dividends from a foreign corporation to the extent that such dividends are treated in part I as income from sources other than the United States. For the purposes of paragraph (), the term “foreign mineral revenues” means revenues derived from the extraction of minerals from mines, wells, or other natural deposits, the processing of such minerals into their primary products, and the transportation, distribution, or sale of such minerals or primary products. This term includes, but is not limited to, the portion of the taxpayer's distributive share of corporate income attributable to foreign mineral revenues. For the purposes of paragraph (), a corporation shall be treated as a possession corporation for any period during which an election under section 936 applies to that corporation (as was in effect the day before the date of enactment of the Tax Technical Corrections Act of 2001), during which section 931 (as in effect the day before the date of enactment of the Tax Reform Act of 197) was applied to that corporation, or during which section 957 (c) (as was in effect) day before the date of enactment of the Tax Reform Act of 1988) that applied to that company.
Sections 275 and 78 shall not apply to any tax that is not allowed as a credit under subsection (a) under this subsection. The Secretary shall prescribe such regulations as are necessary or appropriate to carry out the purposes of this subsection, including regulations that treat income paid through one or more entities as derived from a foreign country to which this subsection applies if such income, regardless of such entities, was derived from that country. For the purposes of this paragraph, the term “withholding tax” includes any tax determined in gross terms; but it does not include any tax that has the nature of an advance payment of a tax on a net basis. The Secretary may prescribe regulations that are appropriate to carry out this paragraph, including regulations to prevent abuse of the exception provided for in this paragraph and to treat other taxes as qualified taxes.
For the purposes of this subsection, the rules in paragraphs (y) of section 246 (c) shall apply. If a person's holding period is reduced due to the application of the rules in section 246 (c) (to any genuine stock sale contract), the determination of whether that person's holding period meets the requirements of paragraph (with respect to taxes considered paid under section 960) shall be determined as of the date that such contract is concluded. Paragraph () shall not apply to any qualifying tax in respect of any property held in a foreign country as a trader of such property. The Secretary may, by regulation, establish that paragraph (it shall not apply) to property when the Secretary determines that the application of the paragraph (to such property) is not necessary to carry out the purposes of this subsection.
Rules similar to the rules in paragraphs (), (), and () of subsection (k) shall apply for the purposes of this subsection. Waiting periods shall be determined for the purposes of this subsection without regard to section 1235 or any similar rule. The basic difference with respect to any relevant foreign asset shall be allocated to tax years using the cost recovery method applicable under this chapter. In the case of a relevant foreign asset with respect to which the amount described in clause (i) (II) exceeds the amount described in clause (i) (I), such excess shall be considered in this subsection as a basic difference from a negative amount.
In the case of an acquisition of covered assets described in paragraph (A), the acquisition of covered assets shall be considered to have occurred at the close of the acquisition date (as defined in section 338 (h) (). For the purposes of this section, the term “relevant foreign asset” means, with respect to any acquisition of covered assets, any asset (including goodwill, the value of the going concern, or other intangible asset) with respect to such acquisition if the income, deduction, gain, or loss attributable to such asset are taken into account when determining the foreign income tax mentioned in paragraph (. For the purposes of this section, the term “foreign income tax” means any tax on income, war profits, or excess profits paid or accrued in any foreign country or on any possession of the United States. The Secretary may issue regulations or other guidelines that are necessary or appropriate to carry out the purposes of this subsection, including to exempt from the application of this subsection certain acquisitions of covered assets and relevant foreign assets with respect to which the basic difference is de minimis.
The Arms Export Control Act, referred to in subsec. For a full classification of this Act in the Code, see the abbreviated note to the title contained in section 275.1 of Title 22 and the tables. Sections 15 (a) and 15C (a) of the Securities Exchange Act of 1934, referred to in the subsection. K) (A) (i), (ii), are classified in sections 78o (a) and 78o—5 (a), respectively, of Title 15, Commerce and Commerce.
K) (by replacing “foreign company” with “foreign company”), was implemented for subsec. L) (to reflect the probable intent of Congress and the redesignation of the subsection. at the end of the heading and replaced “Sections 275 and 78” with “Section 275” in the text. G) as (h) and, in its redesignated form, replaced “section 642 (a) (with “section 642 (a) (in pair).
Like (and inserted) a reference to the pair. C) and (d) as (d) and (e), respectively. Amendment to section 1053 (a) of the Pub. Amendment to section 1142 (e) (of the Pub.
Amendment to section 1012 (j) of the Pub. Amendment to section 112 (b) (of Pub. Amendment to section 1876 (p) (of the Pub. A, to which that amendment refers, see section 1881 of Pub.
Amendment to section 474 (r) (20) of the Pub. Amendment to section 612 (e) (of the Pub. Amendment to section 713 (c) (C) of the Pub. Amendment to section 801 (d) (of Pub.
Amendment to section 201 (d) (A) of the Pub. Amendment to section 265 (b) (A) (iv) of the Pub. Amendment to section 1031 (b) (of the Pub. Amendment to section 1051 (d) (of the Pub.
G) not apply to any tax imposed by a United States possession with respect to full settlement that occurs before January 31. Amendment to section 1901 (b) (H) (iii), (3) (A) of the Pub. Amendment to section 2001 (g) (C) of the Pub. Amendment to section 2002 (g) (of the Pub. Amendment to section 301 (b) (of Pub.
Amendment to section 106 (a) (, (of the Pub. Amendment to section 9 (d) (of the Pub. Amendment to section 12 (b) (of Pub. Amendment to section 3 (a) of the Pub.
Amendment to section 4 (b) (A) of the Pub. J) of this section was applicable to South Africa, see section 4 (b) (B) of the Pub. The foreign tax credit is a dollar for dollar credit equal to the amount of foreign income taxes paid or considered paid by the taxpayer. Subject to various limitations, the amount of taxes paid to foreign countries and to the U.S.
Forward-sourced income possessions offset any U.S. spending. Tax that would be paid on the same income. .
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