Exxon Corp. v. Commissioner
United States Tax Court
113 T.C. 338 (1999)
- Written by David Bloom, JD
Facts
For many years, Exxon Corporation (Exxon) (plaintiff), an oil and gas company, paid the United Kingdom (UK) licensing fees for the right to conduct petroleum exploration activities in the North Sea. When oil prices began to rise, the UK levied a compulsory petroleum revenue tax (PRT) in order to capitalize on the higher profits earned by oil and gas companies and to increase the UK’s tax revenue. After paying the PRT, Exxon claimed a foreign tax credit against Exxon’s income tax liability in the United States. The Internal Revenue Service (IRS) (defendant) disallowed Exxon’s foreign tax credit. Exxon petitioned for judicial review. The IRS argued that Exxon was not entitled to a foreign tax credit because the PRT did not constitute a foreign tax but was a payment by Exxon to the UK for the right to continue exploring for oil. The IRS relied on the opinions of economic experts who testified that Exxon received a favorable licensing deal from the UK in past years and that even though Exxon did not receive any special advantages from having to pay the PRT, the PRT was merely an extension of the prior licensing deal.
Rule of Law
Issue
Holding and Reasoning (Swift, J.)
What to do next…
Here's why 815,000 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.