Accrued foreign taxes

[ED SMITH]

Same client as previous post.

Foreign tax arose from taxes withheld. He also has accrued taxes in the year from the same transaction. The credit can be taken as that paid OR accrued. Can both the paid an accrued taxes be taken on the same return and if so it seems it would require 2 forms 1116?

[Nashville]

I think so

Nothing like a definitive answer, right Ed?

The form itself, on Part II, seems to support the idea of two separate forms, as there are two distinct boxes provided -- one for paid taxes, the other for accrued. The instructions at the top of the page also are clear multiple forms 1116 are sometimes expected.

What I can't answer is what happens when you back out the accrued amount from prior years. I'm sure you're not allowed to deduct the payment in its entirety if the amount has previously been accrued and allowed.

Typical company, Over the Waves, accrues $10K for 2007 and claims credit for that amount in 2007. In 2008, $15K is paid and $12K is accrued. It would appear that the full eligibility would be $17K ($15 + $12 - $10), but not sure how to file multiple forms to claim that number.