Daily Tax Update - February 20, 2013: Supreme Court Hears Oral Arguments in UK "Windfall Profits Tax" Foreign Tax Credit Case

SUPREME COURT HEARS ORAL ARGUMENTS IN U.K. “WINDFALL PROFITS TAX” FOREIGN TAX CREDIT CASE:  Today, the Supreme Court heard oral arguments in PPL Corp. v. Commissioner on whether a U.K. windfall profits tax is a creditable foreign tax under section 901. The Third Circuit has concluded that the U.K. tax is not creditable, while the Fifth Circuit has reached the opposite conclusion.  The question presented to the Court was "whether, in determining the creditability of a foreign tax, courts should employ a formalistic approach that looks solely at the form of the foreign tax statute and ignores how the tax actually operates, or should employ a substance-based approach that considers factors such as the practical operation and intended effect of the foreign tax." 

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