Current year tax.

(4) Current year tax. The term current year tax means a foreign income tax paid or accrued by a controlled foreign corporation in a current taxable year (taking into account any adjustments resulting from a foreign tax redetermination (as defined in 1.905-3(a)). A foreign income tax accrues when all the events have occurred that establish the fact of the liability and the amount of the liability can be determined with reasonable accuracy. See 1.446-1(c)(1)(ii)(A) and 1.461-4(g)(6)(iii)(B) (economic performance exception for certain foreign taxes). Withholding taxes described in section 901(k)(1)(B) that are withheld from a payment accrue when the payment is made. A foreign income tax calculated on the basis of net income (or a base in lieu of net income) for a foreign taxable year accrues on the last day of the foreign taxable year. Accordingly, current year taxes include foreign withholding taxes that are withheld from payments made to the controlled foreign corporation during the current taxable year, and foreign income taxes that accrue in the controlled foreign corporation's current taxable year in which or with which its foreign taxable year ends. Additional payments of foreign income taxes resulting from a redetermination of foreign tax liability, including contested taxes that accrue when the contest is resolved, relate back and are considered to accrue as of the end of the foreign taxable year to which the taxes relate.


26 CFR § 1.960-1

Scoping language

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