U.S. Supreme Court - UK 1997 “windfall tax” is creditable for U.S. tax purposes under section 901 

May 20:  The U.S. Supreme Court today held that a one-time 1997 “windfall tax” imposed by the United Kingdom on 32 UK companies that were privatized between 1984 and 1996 was creditable for U.S. tax purposes under section 901(b)(1). PPL Corp. v. Commissioner, No 12-43 (S. Ct. May 20, 2013)

The Supreme Court applied the “predominant character test” that considers the substantive effect of the tax, to hold the UK tax is creditable under section 901. The Court, thus, agreed with the Tax Court in this case, and reversed the Third Circuit.


Justice Thomas delivered the opinion [PDF 183 KB] for the unanimous Court. Justice Sotomayor filed a concurring opinion.


Read a preliminary report [PDF 64 KB] based on an initial reading of the case, and prepared by KPMG LLP: U.S. Supreme Court holds UK “windfall tax” is a creditable foreign tax for U.S. tax purposes under section 901




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