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Income Sourcing


Determining the source of a taxpayer’s income is important because the foreign tax credit ("FTC") is only available to offset U.S. taxes on foreign source income. In addition, not all income on which a taxpayer pays foreign tax is eligible for the FTC. The sourcing rules are designed to determine which country has a closer connection to the income and, therefore, has the right of taxation. Sourcing rules can be very complicated and subject to many exceptions. Many income tax treaties alter the sourcing rules provided under U.S. internal law making the analysis even more complicated. We can assist you with determining the proper source of income and ways in which you may use the sourcing rules to your benefit.​


Elisa Fay


Partner-in-Charge Rödl National Tax

+1 404 525 2600

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