*4313 1. Petitioner paid income taxes to Canada and the United States on income for 1921, 1922, and 1923, the payments of the Canadian taxes being made early in 1922, 1923, and 1924; petitioner credited the amount of his Canadian tax against the tax shown on his United States return for the respective years, although such Canadian taxes were paid in the following year. Held that such payments constitute credit against the tax of the taxable year in which such payments were made.
2. The computation of the credit provided for by section 1200(a) of the Revenue Act of 1924 is to be made after the deduction of the credit provided for by section 222(a)(1) of the Revenue Act of 1921.
*1051 This proceeding is for a redetermination of deficiencies in income taxes in the amount of $207.57 for 1921, $797.80 for 1922, and $2,218.39 for 1923. The proceeding comes here on the following specific allegations of error:
The points at issue in this case are that the Commissioner proposes to take credits for taxes paid to a foreign country, *4314 against years in which they were actually paid, rather than against the years in which they apply or were incurred.
Also in computing 1923 taxes deficiency letter shows same to contain errors as follows: Deduction of 25% of the tax payable is taken as a deduction after giving credit for taxes paid to Canada, whereas same should be taken before taking credit for the taxes paid to Canada, making a difference or error as follows:
| 25% of $4234.90 | $1058.73 |
| 25% of 3000.57 | 775.14 |
| Difference | 283.59 |
FINDINGS OF FACT.
The petitioner, a citizen of the United States, was during 1921, 1922, and 1923, a resident of Seattle, Wash.
In 1921 the petitioner sold an option on certain mining property in the Yukon Territory, by the terms of which payment was to extend over a period of five years. During 1921 he received as payment on said option $5,750. He paid to the Dominion of Canada, in 1922, a tax in the sum of $236.25, Canadian funds. Petitioner made a return of net income for 1921 to the United States, deducting from the tax shown on such return the tax of $236.25 paid to Canada.
During 1922 he received $13,711 and interest amounting to $618, Canadian funds, *4315 as payment on the option. He made a return and paid Canada taxes in the year 1923 in the sum of $1,163.43, Canadian funds, on his 1922 income. In his return to the United States for 1922 he deducted from the tax shown on such return the $1,163.43 tax paid to Canada in 1923.
In 1923 petitioner received $31,846.24 and interest amounting to $796.50, Canadian funds, on the option. The tax paid to Canada on *1052 his 1923 income early in 1924 amounted to $4,580.69. The petitioner's return to the United States deducted as a credit from the tax shown on his return the amount of $4,580.69, Canadian tax, which he had paid in 1924.
The petitioner was on the cash receipts and disbursements basis.
The respondent refused to allow the payment of the Canadian tax for 1921 as a credit against the United States tax due in 1921 income. The respondent's determination was the same for the years 1922 and 1923. For 1923 the respondent first reduced the tax shown on the return by the credit allowable because of Canadian taxes, and then computed the allowance provided for by section 1200(a) of the Revenue Act of 1924.
OPINION.
MORRIS: We have heretofore considered both*4316 of the questions raised by this petitioner adversely to his contentions, and we have been unable to find facts in this proceeding which would distinguish it from our previous determinations.
The credit which petitioner is seeking to apply is provided for by section 222(a)(1) of the Revenue Act of 1921, which is as follows:
(a) That the tax computed under Part II of this title shall be credited with:
(1) In the case of a citizen of the United States the amount of any income, war-profits and excess-profits taxes paid during the taxable year to any foreign country or to any possession of the United States. (Italic supplied.)
The applicability of this credit was specifically considered in . In that case the petitioner was also on a cash receipts and disbursements basis, and he paid the Dominion of Canada income taxes for 1923 in April, 1924. The respondent's action in refusing to allow this payment as a credit for 1923 was sustained by the Board. The instant case is on all fours with the Hewinson appeal except that here we have three years involved. In each year here involved the Canadian taxes were paid in*4317 the early part of the following year, and, under his method of accounting, such payments can only be a credit for the year in which paid.
The second issue has been discussed fully by the Board in , wherein we held that the credit provided for by section 1200(a) of the Revenue Act of 1924 is to be computed after the deduction of the credit provided for in section 222(a)(1) of the Revenue Act of 1921.
Judgment will be entered for the respondent.
Considered by TRAMMELL, MURDOCK, and SIEFKIN.