Northwestern Mut. Fire Ass'n v. Commissioner of Internal Revenue

In petitioner’s income tax returns for each of the tax years 1942 and 1943 credits, are claimed for “net premium” taxes paid to the Dominion of Canada. Such credits are allowable, petitioner contends, because the foreign taxes so paid were imposed “in lieu of a tax upon income” within the meaning of § 131(h) of our Internal Revenue Code, 26 U.S.C.A. § 131 (h).

Petitioner latef filed timely claims for refund upon the ground that an erroneous computation of the credit limitation imposed by § 131(b) had been made. The limitation of the foreign-tax credit claimed in the returns was computed by adopting the ratio of gross amount of income from Canadian sources to. gross amount of income from all sources. Whereas petitioner now contends that the proper credit limitation is-the ratio of normal-tax net income from Canadian sotirces to such income from all sources. :

The Commissioner assessed deficiencies for the foreign-tax credits claimed in the returns, and also disallowed the claims for refund. The decision of the Tax Court upon stipulated facts, 12 T.C. 498 , upholding both, acts of the Commissioner, is here for review pursuant fo Int.Rev.Code, § 1141(a), 26 U.S.C.A. § 1141…