Section 78 Gross Up

If a domestic corporation chooses to have the benefits of subpart a of part iii of subchapter n relating to foreign tax credit for any taxable year an amount equal to the taxes deemed to be paid by such corporation under subsections a b and d of section 960 determined without regard to the phrase 80 percent of in subsection d 1 thereof for such taxable year shall be treated for purposes of this title.

Section 78 gross up. 1 78 1 gross up for deemed paid foreign tax credit. The section 78 gross up amount only referenced the amounts calculated under former sections 902 a 1 and 960 a 1 c and not former section 960 a 3 because former section 960 a 3 did not directly provide for deemed paid credits but rather referred the taxpayer to former section 902 to compute such amounts. The section 78 gross up with respect to the section 965 a inclusion is computed taking into account the amount disallowed under section 965 g.

Provides that a domestic corporation electing the foreign tax credit must gross up i e increase dividend income by the amount of creditable taxes associated with the dividends received. A taxes deemed paid by certain domestic corporations treated as a dividend. Election under section 3 02 of notice 2018 13 to use alternative method to compute post 1986 earnings and profits.

31 1962 but only to the extent that such distribution is made out of the accumulated profits of a foreign corporation for a taxable year. Gross up for deemed paid foreign tax credit. 1 1965 in a taxable year of such corporation beginning after dec.

Section 78 requires that any such inclusion be grossed up by the amount of the deemed paid ftc and that such indirect ftc is treated as a dividend. Sourcing rules of foreign source income and limitation of foreign tax credits ftcs. Tested foreign income taxes is defined as the foreign income taxes paid or accrued by such foreign corporation which are properly attributable to the tested income of such foreign corporation taken into account by such domestic corporation under 951a.

The 78 gross up is 100 rather than 80 of the 960 deemed paid taxes. See section 965 n for more information. Section applicable in respect of any distribution received by a domestic corporation after dec.