excess profits tax

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excess profits tax,

levy on any profit above a standard level. Chiefly a wartime phenomenon, it is intended to increase revenue during periods of distress and to prevent businessmen from taking unfair advantage of the increased government spending and consumer demand that normally accompany wars. In 1917 the U.S. federal government adopted such a tax, which continued in various forms and at increasing rates until 1921. It was revived by federal legislation during World War II and during the Korean War. The tax was imposed on the excess over a firm's peacetime earnings or over an arbitrarily decreed earning rate. Great Britain levied an excess profits tax from 1915 to 1921, with a rate varying from 40% to 80%. During the era of World War II, Britain's excess profits tax was revived, with tax rates increased to 100%. Critics contend that such levies discourage productive enterprise by eliminating the profit motive.
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section] 901(b)(1) of the Internal Revenue Code and noted that "income, war profits, and excess profits taxes .
law allows taxpayers to claim a credit for foreign income, war profits, and excess profits taxes paid or accrued.
Under IRC sections 901(a) and (b)(1), a domestic corporation may offset its federal income tax liability using a foreign tax credit in "the amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country.
These same vehicles paid the staggering sum of $39,133,000 in operating taxes, exclusive of income and excess profits taxes.
Finally, the instructions require the translation of the provision for income, war profits, and excess profits taxes (line 20 of Schedule C) at the average exchange rate for the year.
901(b)(1), taxpayers can claim a credit for "the amount of any income, war profits, and excess profits taxes paid or accrued .

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