Foreign Tax Credit Limitation

Definition

Section 904 limits the FTC to U.S. tax attributable to foreign-source income within each basket (passive, general, GILTI, branch, treaty-resourced). Excess FTC carries back one year and forward ten.

Examples

• A taxpayer with substantial foreign-source income but limited foreign tax may have unused U.S. credit-against-foreign-income capacity that does not benefit them currently.