International Taxation in a Nutshell by Richard Doernberg

Author:Richard Doernberg
Language: eng
Format: epub
ISBN: 9781634604352
Publisher: West Academic
Published: 2015-03-10T16:00:00+00:00

This produces the same result as the “per country” limitation. (Note that separate baskets apply even if the passive interest income is earned in the same country as the business income.) But, recall that the “per country” limitation failed to protect U.S. source income in the situation where T earned $100,000 of Mexican income and suffered a $100,000 business loss in China. However, applying the baskets to this situation yields a “correct” result, a result that protects the $30,000 U.S. income tax on the $100,000 of U.S. income. Both the Mexican income and the Chinese loss are placed in the general basket (I.R.C. § 904(d)(1)(B)) so that no Mexican taxes are creditable for the taxable year because the numerator in the I.R.C. § 904(a) ratio is $0:

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