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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10506
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi Tax Professional, I understand the Cuban taxes are not

This answer was rated:

Hi Tax Professional,

I understand the Cuban taxes are not creditable under IRC Section 901(j). However, are the Cuban taxes deductible in US tax return?

Thanks!

NPVAdvisor :

Hi Sorry to be the messenger of bad news, but under 901(j) (4) it is stated that no deductions shall be allowed for those countries FOR WHICH no tax CREDIT is allowed

NPVAdvisor :

901(j) (1) is the disallowance of the credit, and 901(j)(4) is the disalloance of any deduction for taxes paid, as well

NPVAdvisor :

My apologies

Customer:

When I read section 901(j)(4)

Customer:

It seems it doesn't clearly say that deduction is disallowed

Customer:

(3)Taxes allowed as a deduction, etc.


Sections 275 and 78 shall not apply to any tax which is not allowable as a credit under subsection (a) by reason of this subsection.

(4)Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations which treat income paid through 1 or more entities as derived from a foreign country to which this subsection applies if such income was, without regard to such entities, derived from such country.

NPVAdvisor :

My apologies

NPVAdvisor :

Section 901(j)(3)

NPVAdvisor :
3) Taxes allowed as a deduction, etc.--Sections 275 and 78 shall not apply to any tax which is not allowable as a credit under subsection (a) by reason of this subsection.


26 U.S.C.A. § 901 (West)

Customer:

but the code says section 275 and 78 shall not apply...

NPVAdvisor :


(a) General rule.--No deduction shall be allowed for the following taxes:




(1) Federal income taxes, including--




(A) the tax imposed by section 3101 (relating to the tax on employees under the Federal Insurance Contributions Act);





(B) the taxes imposed by sections 3201 and 3211 (relating to the taxes on railroad employees and railroad employee representatives); and





(C) the tax withheld at source on wages under section 3402.






(2) Federal war profits and excess profits taxes.





(3) Estate, inheritance, legacy, succession, and gift taxes.





(4) Income, war profits, and excess profits taxes imposed by the authority of any foreign country or possession of the United States if the taxpayer chooses to take to any extent the benefits of section 901.






26 U.S.C.A. § 275 (West)

NPVAdvisor :

IRS uses substance over form

NPVAdvisor :

YOu can look all day for this but the policy behind this is that WILL NOT allow a tax incentive for taxes paid in Cuba

NPVAdvisor :

deduction, credits, foreign income exclusiong, etc

Customer:

Sure, I believe you

Customer:

even though i got confused by the language

NPVAdvisor :

Sorry, but I wouldn't mess with this one ... (just trying to hgelp you see around some corners)

Customer:

Got you, thanks so much!!

NPVAdvisor :

YW

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question

Lane and other Tax Specialists are ready to help you


Thanks for the feedback.

f you'd like to work with ME again just say "For Lane only," at the beginning of your next question

Thanks again,

Lanre