If you’ve paid or accrued foreign taxes to a foreign country and are subject to U.S. tax on the same income, you may be able to claim a foreign tax credit. Generally, only income, war profits and excess profits taxes qualify for the credit. The IRS recently issued final regulations relating to the foreign tax credit. Among other things, the regs provide guidance on the disallowance of a credit or deduction for foreign income taxes with respect to dividends eligible for a dividends-received deduction. The regs also discuss the allocation and apportionment of interest expense, foreign income tax expense, and certain deductions of life insurance companies. Contact us with questions.
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