SERVICE SUSPENDS TEMPORARY RULES FOR RECOMPUTING FOREIGN TAX CREDIT TO ACCOUNT FOR FOREIGN TAX REDETERMINATIONS.

Notice 90-26

The Internal Revenue Service announces the suspension of section 1.905-3T(d)(2)(ii)(A) of the Temporary Income Tax Regulations and that part of section 1.905-3T(d)(2)(ii)(C) which refers to that regulation. Section 1.905-3T(d)(2)(ii)(A) requires taxpayers to recompute the foreign tax credit claimed on their current year income tax return to account for foreign tax redeterminations that (1) affect the amount of foreign tax deemed paid under section 902 or 960 of the Internal Revenue Code and (2) occur more than 90 days before the due date (with extensions) of the tax return for that taxable year and before the actual filing date. Section 1.905-3T(d)(2)(ii)(C) permits taxpayers to elect to apply section 1.905-3T(d)(2)(ii)(A) to a foreign tax redetermination occurring within 90 days of the due date (with extensions) and before the actual filing date. Pending the issuance of final regulations under section 905(c), redeterminations otherwise subject to section 1.905-3T(d)(2)(ii)(A) or (C) must be accounted for through adjustment to the appropriate pools of earnings and profits and foreign taxes in the manner described in section 1.905-3T(d)(3) and subject to the exceptions set forth in section 1.905-3T(d)(4). The suspension announced herein is effective for taxes deemed paid or accrued with respect to earnings and profits of a foreign corporation accumulated in taxable years of the foreign corporation beginning after December 31, 1986.

The principal author of this notice is Eli J. Dicker of the Office of the Associate Chief Counsel (International). For further information about this Notice, contact Mr. Dicker at (202) 566-3452 (not a toll-free call).