[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.905-1]

[Page 771]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.905-1  When credit for taxes may be taken.

    (a) In general. The credit for taxes provided in subpart A (section 
901 and following), part III, subchapter N, chapter 1 of the Code, may 
ordinarily be taken either in the return for the year in which the taxes 
accrued or in which the taxes were paid, dependent upon whether the 
accounts of the taxpayer are kept and his returns filed using an accrual 
method or using the cash receipts and disbursements method. Section 
905(a) allows the taxpayer, at his option and irrespective of the method 
of accounting employed in keeping his books, to take such credit for 
taxes as may be allowable in the return for the year in which the taxes 
accrued. An election thus made under section 905(a) (or under the 
corresponding provisions of prior internal revenue laws) must be 
followed in returns for all subsequent years, and no portion of any such 
taxes accrued in a year in which a credit is claimed will be allowed as 
a deduction from gross income in any year. See also Sec. 1.905-4.
    (b) Foreign income subject to exchange controls. If, however, under 
the provisions of the regulations under section 461, an amount otherwise 
constituting gross income for the taxable year from sources without the 
United States is, owing to monetary, exchange, or other restrictions 
imposed by a foreign country, not includible in gross income of the 
taxpayer for such year, the credit for income taxes imposed by such 
foreign country with respect to such amount shall be taken 
proportionately in any subsequent taxable year in which such amount or 
portion thereof is includible in gross income.