{"data":{"id":"us/26-cfr-301.6316-3","jurisdiction":"us","citation":"26 CFR 301.6316-3","heading":"-3 Allocation of tax attributable to foreign currency.","body":"(a) Adjusted gross income ratio. The portion of the tax which is attributable to amounts received in nonconvertible foreign currency shall, for purposes of applying § 301.6316-1 to the currency of each foreign country, be the amount by which:\n(1) The amount which bears the same ratio to the entire tax for the taxable year as (i) the taxpayer's adjusted gross income received in that currency bears to (ii) the adjusted gross income determined under section 62 by taking into account the entire gross income and all deductions allowable under that section without distinction as to amounts received in foreign currency, exceeds\n(2) The total of the allowable credits against tax, and payments on account of tax, which are properly allocable to the amount of that currency included in gross income.\n(b) Example. (1) For the calendar year 1955 Mr. Jones and his wife filed a joint return on which the adjusted gross income is as follows, after amounts received in foreign currency had been properly translated into United States dollars for tax computation purposes:\nFulbright grant received by Mr. Jones in nonconvertible foreign currency $8,000\nDividends received by Mr. Jones entitled to dividends-received credit 500\nCompensation for personal services of Mrs. Jones 3,000\nNet profit from business carried on by Mrs. Jones 2,500\nTotal adjusted gross income 14,000\n(2) The following amounts are allowable as properly deductible from adjusted gross income, no determination being made as to whether or not any part of them is properly allocable to the Fulbright grant:\nDeduction for personal exemptions $3,000\nCharitable contributions 500\nInterest expense 400\nTaxes 300\nTotal allowable deductions 4,200\n(3) For the taxable year the following amounts are allowable as credits against the tax, or as payments on account of the tax:\nForeign tax credit for foreign taxes paid on Fulbright grant $300.00\nDividends-received credit 20.00\nCredit for income tax withheld upon compensation of Mrs. Jones 304.80\nPayments of estimated tax (see § 301.6316-6(b)(2) for determination of amounts):\nU.S. dollars $426.32\nForeign currency 893.88 1,320.20\nTotal allowable credits and payments 1,945.00\n(4) The portion of the tax which is attributable to amounts received in nonconvertible foreign currency is $33.49, determined as follows:\nAdjusted gross income $14,000.00\nLess: Allowable deductions 4,200.00\nTaxable income 9,800.00\nTax computed under section 2 2,148.00\nRatio of adjusted gross income received in nonconvertible foreign currency to entire adjusted gross income ($8,000 ÷ $14,000) (percent) 57.14\nPortion of tax attributable to nonconvertible foreign currency ($2,148 × 57.14 percent) $1,227.37\nLess:\nCredit for foreign taxes paid on Fulbright grant $300.00\nPayment in foreign currency of estimated tax 893.88 1,193.88\nPortion of tax attributable to amounts received in nonconvertible foreign currency 83.49","path":["Title 26—Internal Revenue","CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY","SUBCHAPTER F—PROCEDURE AND ADMINISTRATION","PART 301—PROCEDURE AND ADMINISTRATION","Collection"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-26.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:25:11Z","sha256":"8f6f63e384a6f9003ad212a9148e6319ce672ed6e71064b51cdde2a42dcadcbc","source_id":"us-cfr","stale":true,"prev":"us/26-cfr-301.6316-2","next":"us/26-cfr-301.6316-4"},"notice":"GroundRules: Original legal text. Not legal advice."}