US withholding taxes paid on the redemption of preference shares of a US subsidiary qualified as income or profits taxes within the meaning of s. 126(7)(c) given that
under U.S. income tax law all distributions of property from a U.S. corporation are considered to be dividends unless there exists certain prescribed conditions. One of the required conditions is that the corporation has no "earnings and profits" at the time of the distribution of property [as was the case here.]
