Allocable employee fringe benefit expenses. The fraction consists of the possession corporation's qualified possession wages for the tax year, divided by the aggregate amount of wages paid or incurred by the possession corporation during the tax year. Qualified tangible property means any tangible property used by the possession corporation in a possession of the United States in the active conduct of a trade or business within such possession. For more information on classifying property and figuring the depreciation deduction, see section 168 and the Instructions for Form 4562, Depreciation and Amortization. For this purpose, possession income taxes are any income, war profits, or excess profits taxes of a possession of the United States which are not taken into account in computing the foreign tax credit.
Income Taxes Complete Part V to figure the corporation's deduction for possession income taxes.