Foreign tax credit allowed for British windfall profits tax

In Entergy Corp, 109 AFTR2d 2012-xxxx (CA-5, 2012), the fifth Circuit disagreed with the decision of Third Circuit in PPL Corp., 665 F.3d 60, 108 AFTR2d 2011-7571 (CA-3, 2011) and affirmed a Tax Court decision allowing a corporation to claim a foreign tax income tax credit for its subsidiary's payment of the United Kingdom's windfall tax. (See "Foreign Tax Credit Not Allowed for British Windfall Profits Tax," 88 PTS 135 (March 2012). The Fifth Circuit agreed with the Tax Court that the windfall tax was based on excess profits, and that it necessarily satisfied Reg. 1 .901 -2(a) s predominant character test: namely, that the windfall tax (1) reached only realized income, (2) was imposed on the basis of gross receipts, and (3) targeted only net income.