Foreign Tax Credits: The End of the Code Sec. 904 10/50 Basket

Section 403 of the American Jobs Creation Act of 2004 substantially amended the foreign tax credit rules applicable from noncontrolled Section 902 corporations. A brief overview of the prior law applicable to dividends from noncontrolled Section 902 corporations is presented. An explanation of the new rules in the Act is discussed, and 3. the identification of one lingering issue - the characterization of dividend distributions that were made by a noncontrolled Section 902 corporation to a controlled foreign corporation before the effective date of the new rules - is explored.