American Chicle Co. v. United States
United States Supreme Court
316 U.S. 450, 62 S. Ct. 1144, 86 L. Ed. 1591 (1942)

- Written by Joe Cox, JD
Facts
American Chicle Co. (American Chicle) (plaintiff), an American corporation, had foreign subsidiaries as sole stockholders. Those subsidiaries each paid taxes upon their earnings to the subsidiaries’ respective nations of domicile. On American Chicle’s income tax returns, the company claimed the credit for foreign taxes paid by the subsidiaries. The Commissioner of Internal Revenue (the commissioner), on behalf of the federal government (defendant), calculated the credit and found that American Chicle had taken too much as credit. The main concern in this matter was calculating the tax deductible for American Chicle. Both parties agreed that the calculation began by dividing the dividend received by the parent corporation by the accumulated profits of the subsidiary. The conflict lies in the factor by which this fraction would be multiplied. American Chicle contended that the factor must be the total foreign taxes paid by the subsidiary. The government argued that the factor must be only as much of the taxes as are properly attributed to the accumulated profits, which was, essentially, on the proportion of taxes equal to the ratio of the accumulated profits to the total profits. The tax code indicated that the credit was for taxes paid upon or with respect to the subsidiary’s accumulated profits. The trial court ruled for the government, and American Chicle appealed.
Rule of Law
Issue
Holding and Reasoning (Roberts, J.)
What to do next…
Here's why 814,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.