Rev. Rul. 71-533

Advice has been requested whether the special ten-year period of limitation provided by section 6511(d)(3)(A) of the Internal Revenue Code of 1954 is applicable under the circumstances described below.

A taxpayer, a calendar year corporation, incurred a net operating loss for the taxable year ended December 31, 1969. The net operating loss was carried back to the taxable year 1966 under the provisions of section 172(b)(1)(A)(i) of the Code. The net operating loss carryback eliminated the taxpayer's entire taxable income for the taxable year 1966. In its original return for 1966, the taxpayer had claimed a foreign tax credit for the foreign taxes it had paid. As a result of the elimination of all of the taxpayer's taxable income for 1966, the entire amount of taxes paid to foreign countries for that year exceeded the amount allowable as a foreign tax credit under the provisions of section 904(a) of the Code for 1966. The taxpayer filed a claim for refund for 1964 for the overpayment attributable to the additional foreign tax credit allowed for 1964 because of the carryback of excess taxes to that year from the year 1966 under the provisions of section 904(d) of the Code.

Section 6511(a) of the Code provides, as to any tax, that unless a claim for credit or refund is filed within three years from the time the return was filed, or within two years from the time the tax was paid, no credit or refund shall be allowed after the termination of whichever of these periods expires later.

Section 6511(d)(3)(A) of the Code provides, however, for a refund or credit period of ten years from the date prescribed by law for the filing of the return if an overpayment results from a claim for credit of foreign taxes, including a credit claimed by reason of the provisions of any treaty.

Revenue Ruling 68-150, C.B. 1968-1, 564 states, in part, that the ten-year period of limitation provided by section 6511(d)(3)(A) of the Code is available for the purpose of determining the size of the credit and is applicable to claims for credit or refund based on the correction of mathematical errors in the computation of taxes subject to the provisions of that section, 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.

Accordingly, where a carryback of foreign taxes arises as a result of a net operating loss carryback from a subsequent taxable year, as in the instant case, a claim for credit or refund on a resulting overpayment of taxes attributable to the foreign tax credit is subject to the ten-year statute of limitations provided by section 6511(d)(3)(A) of the Code.