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PPL Corp. v. Commissioner

Summarized by: 

Date Filed: May 20, 2013
Case #: 12-43
Thomas, J., delivered the opinion for a unanimous Court. Sotomayor, J., filed a concurring opinion.
Full Text Opinion: http://www.supremecourt.gov/opinions/12pdf/12-43_g20h.pdf

Tax Law: "The United Kingdom 'windfall tax' is creditable under IRS code ยง901."

Petitioner owned a business subject to the United Kingdom's 'windfall tax.' Petitioner attempted to claim a credit for the overseas tax. Under the Internal Revenue Code §901(b)(1), "any 'income, war profits, and excess profits taxes' paid overseas are creditable against U.S. income taxes." The Commissioner of Internal Revenue rejected the credit, but the Tax court held that the United Kingdom's windfall tax was creditable. On appeal, the Third Circuit reversed.


The Supreme Court reversed and held that the United Kingdom's 'windfall tax' was creditable under the Internal Revenue Code §901. The Court looked to the "predominant character" of the tax. A tax that operates as an income, war profits, or excessive profits tax for most taxpayers is generally creditable. Additionally, creditablity rest on how a tax would be characterized in the United States. The United Kingdom's 'windfall tax' is an excess profits tax or what would be viewed as income tax in the United States and thus is creditable.