About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

15 Int'l Tax J. 3 (1989)

handle is hein.journals/intaxjo15 and id is 1 raw text is: Dividends From Noncontrolled Section 902 Corporations: Putting the Eggs Into Too Many Baskets WILLIAM G. DAKIN* The United States has always asserted jurisdiction to tax income earned by its nationals anywhere in the world. However, income taxed by the United States may also have been taxed by other countries. Double taxa- tion has been avoided by permitting U.S. taxpayers to credit foreign income taxes against their liability for U.S. income tax.O The credit is given both for taxes that the U.S. taxpayer paid directly and, in the case of corporate taxpayers, for taxes paid by foreign corporations in which the U.S. corpo- ration owns at least 10% of the stock.2 Since the United States has the primary right to tax income from sources within the United States, the amount of foreign tax that may be credited against U.S. tax cannot exceed the amount of U.S. tax on income from sources outside the United States.3 With minor exceptions, prior to the ax Reform Act of 1986 (TRA '86) all foreign-source income from the active conduct of trades or businesses was aggregated in calculating the limita- tion, as follows: Taxable income from sources without the United States x U.S. tax = limitation on credit Entire taxable income TRA '86 fragmented foreign-source income into numerous categories or baskets and prohibited U.S. taxpayers from crediting foreign taxes paid on any one basket of income against U.S. tax due on any other basket of income.4 The ability of U.S. taxpayers to credit foreign taxes, arising from business operations that were taxed at rates above the U.S. rate, against U.S. tax on business operations that were taxed at rates below the U.S. rate, was sharply curtailed. The objective, and the result, is to impose *William G. Dakin is a Supervisory Thx Counsel at Mobil Corporation. He holds an LLB from Harvard Law School and an LLM in Thxation from New York University School of Law.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most