Supreme Court Arguments in ‘PPL' Focus on Formula of Windfall Tax

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The U.S. Supreme Court hears oral argument in a case about whether the U.K. windfall tax is a creditable tax under tax code Section 901 because it is an income tax, or is not creditable because it is a tax on value. The justices focus on the mathematical formula that was used to calculate the windfall tax as a base for determining whether a tax credit could be taken for the windfall tax. The windfall tax was a one-time 23 percent tax imposed on privatized utilities based on the difference between a company's profit-making value and its privatized value. PPL Corp. claimed a foreign tax credit for the windfall tax, and the Internal Revenue Service determined it was not a tax for which a credit was available.

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