Substance over Form: Creditability of the 1997 U.K. Windfall Tax as an Excess Profits Tax Under I.R.C. § 901

Abstract:     
This paper analyzes the U.K. Windfall Tax's creditability under § 901 of the Internal Revenue Code and its associated regulation. When this paper was originally written in the fall of 2011, the United States Tax Court had found the U.K. Windfall Tax creditable in two cases. Both were appealed to separate circuits, and while the Entergy case was affirmed, the PPL case was reversed. The Supreme Court has since granted certiorari and will resolve the circuit split this year.

This Note shows that the extrinsic evidence is admissable to demonstrate creditability, and that the U.K. Windfall Tax is a creditable tax because it is an "excess profits tax." It uses historical evidence of the 1940s-era Excess Profits Tax to show that the U.K. Windfall Tax fits squarely into the definition of excess profits taxes contemplated by Congress when they passed the Revenue Act of 1918, from which the current § 901 came verbatim.

Number of Pages in PDF File: 29

Keywords: Internal revenue code, 901, § 901, war profits, excess profits, income tax, IRS, PPL, Entergy, Commissioner, PPL v. CIR, Entergy v. CIR

Accepted Paper Series