Tenth Circuit affirms IRS in Liberty Global foreign tax credit dispute
Liberty Global, Inc. v. Commissioner, No. 24-9004, 2025 BL 298335 (10th Cir. Aug. 22, 2025), Court Opinion
On August 22, 2025, the U.S. Court of Appeals for the Tenth Circuit affirmed a Tax Court decision in Liberty Global, Inc. v. Commissioner, holding that Liberty Global could not treat the bulk of its gain from a 2010 sale of Japanese stock as foreign-source income for foreign tax credit purposes.
The court read the statute to source only the portion needed to recapture Liberty Global’s overall foreign loss, with the remaining gain sourced to the United States, eliminating the claimed $240 million credit.
Why It Matters
The ruling applies the foreign loss recapture rules in section 904(f) and the general sourcing rule in section 865 to large stock dispositions by U.S. multinationals. It reinforces that section 904(f)(3) deems foreign-source income only up to the overall foreign loss balance, and that excess gain remains subject to the default U.S. sourcing rule.
Key Facts
Parties: Liberty Global, Inc. (petitioner-appellant) vs. Commissioner of Internal Revenue (respondent-appellee).
Court: U…
