The Education Jobs and Medicaid Assistance Act enacted on August 10, 2010 added section 909 to the Code. Notice 2010-92 addresses the application of section 909 to foreign income taxes paid or accrued in taxable years of a section 902 corporation beginning on or before December 31, 2010. The term “§902 corporation” is defined in §909(d)(5) to mean a foreign corporation with one or more domestic shareholders that meets the ownership requirements of §902(a) or (b). §902 provides for deemed paid credit in cases where domestic corporation owns 10 percent or more of voting stock of foreign corporation.
The Notice addresses situations where foreign income taxes have been separated from the related income. Section 909(a) provides that if there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by a taxpayer, such tax shall not be taken into account for federal tax purposes before the taxable year in which the related income is taken into account by the taxpayer.