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A credit is allowed for foreign income taxes paid or accrued. The loan is limited special part of Ough.S. tax due to foreign source income. It isn't refundable, but any excess credit can be carried to other years to reduce tax.

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B) Interest earned, although paid, during a bond year, must be accrued at the end of the bond year and reported as taxable income for the calendar year in that the bond year ends.

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