11 May 2012 External T.I. 2011-0428791E5 - Foreign Tax Credit -- summary under Business-Income Tax

Respecting a question as to whether state franchise tax paid by a Canadian taxpayer (Canco) for the business income tax credit, CRA indicated that the tax should qualify as an income or profits tax if it was determined as an allocated percentage of Canco' net income, so that the credit under s. 126(2) potentially would be available provided that Canco also was carrying on business in the US (which could be the case even if it did not have a permanent establishment there). An extensive list of factors relevant to whether Canco would be considered to be carrying on business in the US is provided.