Appellate Court Urged to Vacate FedEx’s $84 Million Tax Credit

A federal district court’s decision to allow FedEx an $84 million foreign tax credit tied to “offset earnings” paid on its foreign subsidiaries should be reversed because a disallowance rule applies, the US government told the Sixth Circuit.

The statutory framework governing foreign tax credits and Subpart F income doesn’t allow foreign tax credits for income permanently exempted from US taxation, the US Department of Justice said in a May 14 reply brief filed with the US Court of Appeals for the Sixth Circuit. IRC Section 965(g) limits foreign tax credits to amounts needed to avoid double taxation, and the ...