Page 751 - Large Business IRS Training Guides

Example 5:
No Credit Allowed Under Section

960(a)(3)

• USP’s section 965(a) inclusion amount is: $50
• USP’s deemed paid taxes before disallowance
are (S.960(a)(1)):

S. 965(a) inclusion x Post-1986

foreign

Post-1986 undistributed earnings income
taxes

$50 X $40 = $10
$200

• USP’s applicable percentage is:

(($50 / $50) * 55.7%) + (($0 / $50) * 77.1%) =
55.7%

• Before considering the foreign tax credit
limitation, USP’s allowed deemed paid taxes are:

$10 x (1-55.7%) 73
= $4.43