Quinnco Case Summary

In the case of QuinnCo, the reasons they could not claim their income taxes paid to Japan as a foreign tax credit is due to the foreign tax credit limitation. The foreign tax credit limitation is equal to U.S. tax before foreign tax credit * (Foreign-source taxable income/Total Taxable income). This limitation is used to help with double taxation. As QuinnCo could be taxed by Japan and another country it does business in. In using the foreign tax credit limitation the lesser of actual foreign tax paid or the limitation, therefore in QuinnCo’s case, the amount of the limitation was less than the amount of their foreign taxes paid causing them to not be able to claim all of the income taxes. An example to demonstrate QuinnCo’s circumstances