Continuing our series on Famous Tax Quotes (quotes from court opinions and rulings with language that is colorful or that concisely states an important tax principle), today's tax quote deals with a domestic corporation which, in a “sixty-day letter” of protest to a deficiency redetermination, asked that foreign taxes be allowed as a credit rather than as a deduction.
A redetermination of tax liability by [the IRS] is, for practical purposes, an amendment of the taxpayer’s return * * *. We believe that the letter of protest asserting an election which was filed shortly after the redetermination, when taken in conjunction with the redetermination itself, may be regarded as the equivalent of an amended return manifesting an election.
Nor do we think it fatal that the taxpayer did not comply with the regulation which requires the filing of form 1118. The purpose of that form is to give the tax officials full information about the foreign taxes. When they obtain that information by their audit, as they did here, compliance with the regulation serves no useful purpose. * * * Here, in the circumstances, the failure to comport with the regulation was the omission of a mere formality. Perhaps it is sometimes justifiable to discipline young children for infraction of rules which have no practical importance. But we think that Congress did not want to deal with citizens as if they were still in the nursery. [Emphasis added]
W.K. Buckley, Inc. v. Commr., 158 F.2d 158 (2d Cir. 1946)
(An interesting tidbit from this case is that Form 1118 (or Form 1116, for individuals) is generally required in order to claim foreign tax credits. See Treas. Reg. §1.905-2(a)(1) ("[T]he claim for credit shall be accompanied by Form 1116 in the case of an individual or by Form 1118 in the case of a corporation."))