Deemed Paid Foreign Tax Credit

§ 960. Deemed paid credit for subpart F inclusions(a) In generalFor purposes of subpart A of this part, if there is included in the gross income of a domestic corporation any item of income under section 951(a)(1) with respect to any controlled foreign corporation with respect to which such domestic corporation is a United States shareholder, such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as are properly attributable to such item of income. (b) Special rules for distributions from previously taxed earnings and profitsFor purposes of subpart A of this part—(1) In generalIf any portion of a distribution from a controlled foreign corporation to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation is excluded from gross income under section 959(a), such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as—(A) are properly attributable to such portion, and (B) have not been deemed to have to 11 So in original. been paid by such domestic corporation under this section for the taxable year or any prior taxable year. (2) Tiered controlled foreign corporationsIf section 959(b) applies to any portion of a distribution from a controlled foreign corporation to another controlled foreign corporation, such controlled foreign corporation shall be deemed to have paid so much of such other controlled foreign corporation’s foreign income taxes as—(A) are properly attributable to such portion, and (B) have not been deemed to have been paid by a domestic corporation under this section for the taxable year or any prior taxable year. (c) Special rules for foreign tax credit in year of receipt of previously taxed earnings and profits(1) Increase in section 904 limitationIn the case of any taxpayer who—(A) either (i) chose to have the benefits of subpart A of this part for a taxable year beginning after September 30, 1993, in which he was required under section 951(a) to include any amount in his gross income, or (ii) did not pay or accrue for such taxable year any income, war profits, or excess profits taxes to any foreign country or to any possession of the United States, (B) chooses to have the benefits of subpart A of this part for any taxable year in which he receives 1 or more distributions or amounts which are excludable from gross income under section 959(a) and which are attributable to amounts included in his gross income for taxable years referred to in subparagraph (A), and (C) for the taxable year in which such distributions or amounts are received, pays, or is deemed to have paid, or accrues income, war profits, or excess profits taxes to a foreign country or to any possession of the United States with respect to such distributions or amounts,