A Canadian resident individual taxpayer reported the income (which was not distributed) of a wholly-owned S Corporation in his U.S. tax return in 2006. He claimed a deduction under s. 20(12) respecting the U.S. tax that he paid on such income. CRA stated:
[A] deduction in a taxation year under subsection 20(12)…for U.S. tax paid by the taxpayer for the year in respect of his share of income of an S Corporation is not to be denied even though the taxpayer does not receive a distribution from the S Corporation in the year. …