Rev. Rul. 77-54

Advice has been requested whether, under the circumstances described below, an error in the computation of the per country limitation imposed by section 904(a)(1) of the Internal Revenue Code of 1954 on the foreign tax credit allowed by section 901(b) may be corrected within the 10 year period of limitations provided in section 6511(d)(3)(A).

The taxpayer has elected to use the per country limitation imposed by section 904(a)(1) of the Code in determining the amount of foreign tax credit to which it is entitled under section 901(b). The taxpayer claimed a foreign tax credit of 5 x dollars on its timely filed 1966 calendar year Federal income tax return. The taxpayer's total foreign tax available for credit before computing the per country limitation was 10 x dollars, but, due to an error in the computation of the per country limitation, the taxpayer claimed only 5 x dollars.

On November 15, 1976, the taxpayer filed a claim for refund of 1966 tax in the amount of 1x dollars, after recomputing the foreign tax credit per country limitation for 1966 to be 6x dollars.

Section 6511(a) of the Code requires, generally, that any claim for credit or refund must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid whichever of such periods expires the later.

Section 6511(d)(3)(A) of the Code provides that if the claim for credit or refund relates to an overpayment attributable to any taxes paid or accrued to any foreign country or U.S. possession for which credit is allowed under section 901, the period, in lieu of the 3-year period of limitation on claims for credit or refund of income tax prescribed by section 6511(a), shall be 10 years from the date prescribed by law for filing the return for the year with respect to which the claim is made.

Rev. Rul. 68-150, 1968-1 C.B. 564, provides that the 10 year period of limitations provided by section 6511(d)(3)(A) of the Code is applicable to claims for credit or refund based on the correction of mathematical errors in the computation of the taxes subject to the provisions of section 6511(d)(3)(A), the discovery of creditable taxes which were not reported on the income tax return when filed, or any other adjustments to the size of the foreign tax credit, including those due to the payment of additional foreign taxes.

The correction of an error in computation of the per country limitation is an "adjustment to the size of the foreign tax credit" within the meaning of Rev. Rul. 68-150.

Accordingly, in the instant case, an error in the computation of the per country limitation imposed by section 904(a)(1) of the Code on the foreign tax credit allowed by section 901(b) may be corrected within the 10 year period of limitations provided in section 6511(d)(3)(A).