Stock Redemptions Can Reduce Foreign Tax Credit, IRS Says

Law360, New York (November 4, 2013, 6:18 PM EST) -- When a foreign corporation's post-1986 undistributed earnings are reduced due to a stock redemption, its foreign income taxes must also be reduced before its U.S. parent can take a credit on them, the Internal Revenue Service said in a memorandum posted Friday.

The agency says the reduction is necessary in order to ensure that foreign branches and subsidiaries of U.S. corporations receive equal tax treatment, as there would be a disparity if a U.S. parent was allowed to take a foreign income tax credit for a...
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