I’ve chosen to take a credit for foreign taxes accrued on Form 1116 in the past. Can I instead take a credit for taxes paid in the current year?

If you’re a cash basis taxpayer, you can only take the foreign tax credit in the year you pay the qualified foreign tax unless you elect to claim the foreign tax credit in the year the taxes are accrued. Once you make this election, you can’t switch back to claiming the taxes in the year paid in later years.

All About Randall Brody
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