Tax Credit Available to Offset Taxes Paid To Foreign Country.

The Internal Revenue Code (Code) taxes the income of a U.S. taxpayer that is earned in a foreign country.  That foreign country also taxes the same income.  However, the Code allows many taxpayers to either deduct the foreign taxes from gross income for U.S. tax purposes or claim a credit capped at the lesser of the proportion of U.S. tax of the taxpayer's taxable income from foreign sources or the taxpayer's entire taxable income as it bears to the taxpayer's taxable income.  In 2013, the U.S. Supreme court held that foreign paid taxes are creditable under I.R.C. Sec. 901.  The court, affirming the Tax Court, has followed the Supreme Court's guidance.  PPL Corporation and Subsidiaries v. Comr., No. 11-1069, 2014 U.S. App. LEXIS 16479 (3d Cir. Aug. 26, 2014).