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Prior studies inferred residual tax either from financial statement data or from residual tax reported on income tax returns. This paper identifies issues with both methods, showing that the two approaches can produce different results for the same firm. It evaluates generally accepted residual tax measures and a third measure tied to anticipated residual tax after accounting for unused foreign tax credit carryovers, finding weak alignment with commonly used foreign tax credit position measures.",{"@graph":63,"@context":118},[64,80,101],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":51,"@type":70,"position":76},"https://docshare.wps.com/template/general/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/measuring-a-companys-foreign-tax-credit-position-ota-paper-97-october-2006/302592/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/measuring-a-companys-foreign-tax-credit-position-ota-paper-97-october-2006/302592.png","ImageObject",442,249,{"name":88,"@type":89},"นรินทร์","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-09-23","2026-09-19",true,{"@type":98,"interactionType":99,"userInteractionCount":73},"InteractionCounter",{"@type":100},"ViewAction",{"@type":102,"mainEntity":103},"FAQPage",[104,110,114],{"name":105,"@type":106,"acceptedAnswer":107},"What is the residual U.S. tax concept examined in this study?","Question",{"text":108,"@type":109},"It refers to the U.S. tax on foreign corporate earnings after applying the foreign tax credit. The study focuses on how this residual tax relates to business decisions and measured tax-credit positions.","Answer",{"name":111,"@type":106,"acceptedAnswer":112},"Why do the two common approaches to inferring residual tax produce problems?",{"text":113,"@type":109},"The paper shows that inferring residual tax from financial statement data versus using residual tax in income tax returns can lead to different results for the same firm. It also details differences between foreign income and creditable foreign taxes across these reporting sources.",{"name":115,"@type":106,"acceptedAnswer":116},"How does the paper evaluate a third measure of the foreign tax credit position?",{"text":117,"@type":109},"It compares generally accepted residual tax measures with a third measure designed to reveal whether a company anticipates owing residual tax for the year, accounting for carryovers of unused foreign tax credits. 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Rousslang  \nHawaii State Department of Taxation  \nOTA Paper 97 October 2006  \nOTA Papers is an occasional series of reports on the research, models, and data sets developed to inform and improve Treasury’s tax policy analysis. The papers are works in progress and subject to revision. Views and opinions expressed are those of the authors and do not necessarily represent official Treasury positions or policy. OTA Papers are distributed in order to document OTA analytic methods and data and invite discussion and suggestions for revision and improvement. Comments are welcome and should be directed to the authors.  \nThe authors thank Charles Boynton, Harry Grubert, Don Kiefer and William Randolph for helpful comments and discussion. The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Treasury Department.  \nMEASURING A COMPANY’S  \nFOREIGN TAX CREDIT POSITION  \nby  \nHenry Louie and Gerald Silverstein Office of Tax Analysis, U.S. Department of Treasury  \nand  \nDonald J. Rousslang  \nHawaii State Department of Taxation  \nOTA Paper 97 October 2006  \nOTA Papers is an occasional series of reports on the research, models, and data sets developed to inform and improve Treasury’s tax policy analysis. The papers are works in progress and subject to revision. Views and opinions expressed are those of the authors and do not necessarily represent official Treasury positions or policy. OTA Papers are distributed in order to document OTA analytic methods and data and invite discussion and suggestions for revision and improvement. Comments are welcome and should be directed to the authors.  \nOffice of Tax Analysis  \nDepartment of the Treasury  \nWashington, DC 20220  \nThe authors thank Charles Boynton, Harry Grubert, Don Kiefer and William Randolph for helpful comments and discussion. The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Treasury Department.  \nAbstract  \nA number of authors have tried to discover how the residual U.S. tax on foreign corporate earnings (the U.S. tax after the foreign tax credit) affects business decisions. Some of them inferred the residual tax from data in the company’s financial statement, whereas others used the residual tax reported in the company's income tax return. In the present study, we point out problems with both approaches. For instance, we show that in many cases, the two approaches yield different results for the same firm. We then compare the generally accepted measures of the residual tax with a third measure that, at least conceptually, should reliably reveal whether the company anticipates owing a residual tax for the year, after accounting for its ability to carry unused foreign tax credits over to prior or future years. We find that this third measure does not accord well with the commonly used measures of the company’s foreign tax credit position. We believe that our results, therefore, draw into question the conclusions ofthe earlier studies that tried to capture the incentives [imparted by the residual U.S. tax](imparted by the residual U.S. tax).  \nTable of Contents  \nIntroduction................................................................................................................................... 4  \nThe U.S. Rules for Taxing Foreign Earnings ............................................................................. 6  \nProblems Encountered When Inferring the Company’s Foreign Tax Credit Position from Its Financial Statement ....................................................................................................... 9  \nDifferences Between FSI and Foreign Income as Reported in the Financial Statement............ 9  \nDifferences between Creditable Foreign Taxes Reported on Tax Returns and","cbCaihsZG1lQHyCl","https://ap.wps.com/l/cbCaihsZG1lQHyCl","pdf",445855,33,"English","# Introduction\n## The U.S. Rules for Taxing Foreign Earnings\n## Problems Encountered When Inferring the Company’s Foreign Tax Credit Position from Its Financial Statement\n## Differences Between FSI and Foreign Income as Reported in the Financial Statement\n## Measuring the Final Foreign Tax Credit Position and Inferring the Anticipated Final Position\n## Summary and Conclusions","[{\"question\":\"What is the residual U.S. tax concept examined in this study?\",\"answer\":\"It refers to the U.S. tax on foreign corporate earnings after applying the foreign tax credit. The study focuses on how this residual tax relates to business decisions and measured tax-credit positions.\"},{\"question\":\"Why do the two common approaches to inferring residual tax produce problems?\",\"answer\":\"The paper shows that inferring residual tax from financial statement data versus using residual tax in income tax returns can lead to different results for the same firm. It also details differences between foreign income and creditable foreign taxes across these reporting sources.\"},{\"question\":\"How does the paper evaluate a third measure of the foreign tax credit position?\",\"answer\":\"It compares generally accepted residual tax measures with a third measure designed to reveal whether a company anticipates owing residual tax for the year, accounting for carryovers of unused foreign tax credits. The findings indicate this third measure does not align well with commonly used measures of the foreign tax credit position.\"}]","MEASURING A COMPANY’S FOREIGN TAX CREDIT POSITION - OTA Paper 97 - October 2006 | PDF",1789794366]