Question 1

Describe and diagram the timeline that most businesses use to enter the international markets.

Accepted Answer

Most businesses ente...

Question 2

A domestic corporation is one whose assets are primarily located in the U.S.For this purpose,the primarily located test (>50%) applies.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements best describes the purpose of § 482,under which the Treasury can reallocate income and deductions among related taxpayers?

Accepted Answer

A)  To provide tax benefits to U.S.multinationals that export U.S.produced property.
B)  To allow the IRS to select the best method for determining transfer prices for U.S.taxpayers.
C)  To alleviate double taxation problems generated by related entities doing business in two or more countries.
D)  To place a controlled entity on a tax parity with an uncontrolled entity with regard to prices charged by the entities.E) B) and C)
F) B) and D)

Question 4

In working with the foreign tax credit,a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Accepted Answer

A)  Deducting the excess foreign taxes that do not qualify for the credit.
B)  Repatriating more foreign income to the United States in the year there is an excess limitation.
C)  Generating "same basket" foreign-source income that is subject to a tax rate higher than the U.S.tax rate.
D)  Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S.tax rate.E) A) and D)
F) None of the above

Question 5

U.S.income tax treaties typically:

Accepted Answer

A)  Provide for taxation exclusively by the source country.
B)  Provide for taxation exclusively by the country of residence.
C)  Provide rules by which multinational taxpayers avoid double taxation.
D)  Provide that the country with the highest tax rate will be allowed exclusive tax collection rights.E) B) and D)
F) A) and D)

Question 6

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
a.Indirect credit
b.Direct credit
c.One
d.Two
e.Ten
f.Twenty
g.Gross-up (§ 78)
h.Overall foreign loss
-Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Accepted Answer

The answer of Match the definition with the correct term....

Question 7

Income tax treaties may provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S.statutory law.

Accepted Answer

A) True 
 B)False

Question 8

Luisa,a non-U.S.person with a green card,spends the following days in the United States. Year 1 360 days Year 2 210 days Year 3 30 days Luisa's residency status for Year 3 is:

Accepted Answer

A)  U.S.resident because she has a green card.
B)  U.S.resident since she was a U.S.resident for the past immediately preceding two years.
C)  Not a U.S.resident because Luisa was not in the United states for more than 30 days during Year 3.
D)  Not a U.S.resident since,using the three-year test,Luisa is not present in the United States for at least 183 days.E) A) and B)
F) A) and C)

Question 9

Which of the following situations requires the filing of an information return with the U.S.government?

Accepted Answer

A)  A domestic corporation that is 25% or more foreign owned.
B)  A foreign corporation carrying on a trade or business in the United States.
C)  U.S.persons who acquire or dispose of an interest in a foreign partnership.
D)  All of the above.
E)  None of the above.F) B) and D)
G) C) and D)

Question 10

During the current year,USACo (a domestic corporation)  sold equipment to FrenchCo,a foreign corporation,for $350,000,with title passing to the buyer in France.USACo purchased the equipment several years ago for $100,000 and took $80,000 of depreciation deductions on the equipment,all of which were allocated to U.S.-source income.USACo's adjusted basis in the equipment is $20,000 on the date of sale.What is the source of the $330,000 gain on the sale of this equipment?

Accepted Answer

A)  $330,000 foreign source.
B)  $330,000 U.S.source.
C)  $250,000 foreign source and $80,000 U.S.source.
D)  $250,000 U.S.source and $80,000 foreign source.E) B) and D)
F) None of the above

Question 11

GlobalCo,a foreign corporation not engaged in a U.S.trade or business,receives $80,000 in interest income from deposits with the foreign branch of a U.S.bank.The U.S.bank earns 24% of its income from foreign sources.How much of GlobalCo's interest income is U.S.source?

Accepted Answer

A)  $0
B)  $19,200
C)  $60,800
D)  $80,000E) A) and B)
F) A) and C)

Question 12

Which of the following is not a foreign person?

Accepted Answer

A)  Foreign corporation 51% owned by U.S.shareholders.
B)  Foreign corporation 100% owned by a domestic corporation.
C)  Citizen of Germany with U.S.permanent resident status (i.e. ,green card) .
D)  Citizen of Italy who spends 14 days vacationing in the United States.E) None of the above
F) A) and B)

Question 13

Your client holds foreign tax credit (FTC) carryforwards,i.e. ,it is in an "excess credit" position.Give at least three planning ideas that the client should implement,so as to free up the suspended FTCs.

Accepted Answer

∙ Generate "same basket" foreign-source ...

Question 14

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
a.Foreign base company income
b.Foreign personal holding company income
c.Controlled foreign corporation
d.U.S. shareholder
e.Previously taxed income
f.More than 10 percent
g.More than 50 percent
h.More than 80 percent
-Portfolio income treated as Subpart F income.

Accepted Answer

The answer of Match the definition with the correct term....

Question 15

Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

Accepted Answer

A)  Because the inventory is manufactured in the U.S. ,all of the inventory income is U.S.source.
B)  If title passes on the inventory outside the U.S. ,all of the inventory income is foreign source.
C)  The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on where the sale negotiation takes place.
D)  The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on location of production assets.E) B) and D)
F) C) and D)

Question 16

Which of the following is a principle used in applying the income-sourcing rules under U.S.tax law?

Accepted Answer

A)  The rules should be acceptable to both countries.
B)  The rules should favor the U.S.Treasury.
C)  The rules should favor the treasury of the non-U.S.country.
D)  The rules should apply to income items only;deductions need not be sourced in this way.E) A) and B)
F) B) and D)

Question 17

ForCo,a subsidiary of a U.S.corporation incorporated in Belgium,manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany.The income from the sale of widgets is not Subpart F foreign base company sales income.

Accepted Answer

A) True 
 B)False

Question 18

Freda was born and continues to live in Uruguay.She exports widgets to U.S.customers.The U.S.does not have in force an income tax treaty with Uruguay.Freda's net U.S.income from the widgets is subject to a flat 30% Federal income tax rate.

Accepted Answer

A) True 
 B)False

Question 19

Wood,a U.S.corporation,owns Holz,a German corporation.Wood receives a dividend (non-Subpart F income)  from Holz of 75,000€.The average exchange rate for the year is $1US: 0.6€,and the exchange rate on the date of the dividend distribution is $1US: 0.80€.Wood's exchange gain or loss is:

Accepted Answer

A)  $15,000 loss.
B)  $15,000 gain.
C)  $75,000 gain.
D)  $0.There is no exchange gain or loss on a dividend distribution.E) B) and D)
F) B) and C)

Question 20

A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly,indirectly,and constructively at least 50% of the voting power of a foreign corporation.

Accepted Answer

A) True 
 B)False

Exam 25: Taxation of International Transactions

Correct Answer
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Freda was born and continues to live in Uruguay.She exports widgets to U.S.customers.The U.S.does not have in force an income tax treaty with Uruguay.Freda's net U.S.income from the widgets is subject to a flat 30% Federal income tax rate.

Correct Answer
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Which of the following is not a foreign person?

Correct Answer
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Income tax treaties may provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S.statutory law.

Correct Answer
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Luisa,a non-U.S.person with a green card,spends the following days in the United States. Year 1 360 days Year 2 210 days Year 3 30 days Luisa's residency status for Year 3 is:

Correct Answer
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In working with the foreign tax credit,a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Correct Answer
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Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

Correct Answer
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ForCo,a subsidiary of a U.S.corporation incorporated in Belgium,manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany.The income from the sale of widgets is not Subpart F foreign base company sales income.

Correct Answer
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Which of the following statements best describes the purpose of § 482,under which the Treasury can reallocate income and deductions among related taxpayers?

Correct Answer
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Correct Answer
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Wood,a U.S.corporation,owns Holz,a German corporation.Wood receives a dividend (non-Subpart F income) from Holz of 75,000€.The average exchange rate for the year is $1US: 0.6€,and the exchange rate on the date of the dividend distribution is $1US: 0.80€.Wood's exchange gain or loss is:

Correct Answer
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Describe and diagram the timeline that most businesses use to enter the international markets.

Correct Answer
verified
Most businesses ente...
View Answer

U.S.income tax treaties typically:

Correct Answer
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Your client holds foreign tax credit (FTC) carryforwards,i.e. ,it is in an "excess credit" position.Give at least three planning ideas that the client should implement,so as to free up the suspended FTCs.

Correct Answer
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∙ Generate "same basket" foreign-source ...
View Answer

Which of the following is a principle used in applying the income-sourcing rules under U.S.tax law?

Correct Answer
verified

A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly,indirectly,and constructively at least 50% of the voting power of a foreign corporation.

Correct Answer
verified

GlobalCo,a foreign corporation not engaged in a U.S.trade or business,receives $80,000 in interest income from deposits with the foreign branch of a U.S.bank.The U.S.bank earns 24% of its income from foreign sources.How much of GlobalCo's interest income is U.S.source?

Correct Answer
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Which of the following situations requires the filing of an information return with the U.S.government?

Correct Answer
verified

A domestic corporation is one whose assets are primarily located in the U.S.For this purpose,the primarily located test (>50%) applies.

Correct Answer
verified

Correct Answer
verified

Exam 25: Taxation of International Transactions

Correct AnswerverifiedShow Answer

Freda was born and continues to live in Uruguay.She exports widgets to U.S.customers.The U.S.does not have in force an income tax treaty with Uruguay.Freda's net U.S.income from the widgets is subject to a flat 30% Federal income tax rate.

Correct AnswerverifiedShow Answer

Which of the following is not a foreign person?

Correct AnswerverifiedShow Answer

Income tax treaties may provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S.statutory law.

Correct AnswerverifiedShow Answer

Luisa,a non-U.S.person with a green card,spends the following days in the United States. Year 1 360 days Year 2 210 days Year 3 30 days Luisa's residency status for Year 3 is:

Correct AnswerverifiedShow Answer

In working with the foreign tax credit,a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Correct AnswerverifiedShow Answer

Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

Correct AnswerverifiedShow Answer

ForCo,a subsidiary of a U.S.corporation incorporated in Belgium,manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany.The income from the sale of widgets is not Subpart F foreign base company sales income.

Correct AnswerverifiedShow Answer

Which of the following statements best describes the purpose of § 482,under which the Treasury can reallocate income and deductions among related taxpayers?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Wood,a U.S.corporation,owns Holz,a German corporation.Wood receives a dividend (non-Subpart F income) from Holz of 75,000€.The average exchange rate for the year is $1US: 0.6€,and the exchange rate on the date of the dividend distribution is $1US: 0.80€.Wood's exchange gain or loss is:

Correct AnswerverifiedShow Answer

Describe and diagram the timeline that most businesses use to enter the international markets.

Correct AnswerverifiedMost businesses ente...View AnswerShow Answer

U.S.income tax treaties typically:

Correct AnswerverifiedShow Answer

Your client holds foreign tax credit (FTC) carryforwards,i.e. ,it is in an "excess credit" position.Give at least three planning ideas that the client should implement,so as to free up the suspended FTCs.

Correct Answerverified∙ Generate "same basket" foreign-source ...View AnswerShow Answer

Which of the following is a principle used in applying the income-sourcing rules under U.S.tax law?

Correct AnswerverifiedShow Answer

A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly,indirectly,and constructively at least 50% of the voting power of a foreign corporation.

Correct AnswerverifiedShow Answer

GlobalCo,a foreign corporation not engaged in a U.S.trade or business,receives $80,000 in interest income from deposits with the foreign branch of a U.S.bank.The U.S.bank earns 24% of its income from foreign sources.How much of GlobalCo's interest income is U.S.source?

Correct AnswerverifiedShow Answer

Which of the following situations requires the filing of an information return with the U.S.government?

Correct AnswerverifiedShow Answer

A domestic corporation is one whose assets are primarily located in the U.S.For this purpose,the primarily located test (>50%) applies.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Most businesses ente...
View Answer

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∙ Generate "same basket" foreign-source ...
View Answer

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