Question 1

Dividends received from a domestic corporation are totally U.S. source:

Accepted Answer

A)   If the corporation earns at least 80% of its gross income over the immediately preceding three tax years from the active conduct of a U.S. trade or business.
B)   If the corporation earns at least 25% of its gross income over the immediately preceding three tax years from the active conduct of a U.S. trade or business.
C)   Unless the corporation earns at least 80% of its gross income over the immediately preceding three tax years from the active conduct of a foreign trade or business.
D)   Unless the corporation earns at least 25% of its gross income over the immediately preceding three tax years from the active conduct of a foreign trade or business.
E)   In all of the above cases.F) A) and E)
G) C) and D)

Question 2

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" foreign­source in...

Question 3

Jokerz, a CFC of a U.S. parent, generated $80,000 Subpart F foreign base company services income in its first year of operations. The next year, Jokerz distributes $50,000 cash to the parent, from those service profits. The parent is taxed on $0 in the first year (tax deferral rules apply) and $50,000 in the second year.

Accepted Answer

A) True 
 B)False

Question 4

An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Accepted Answer

The answer of An individual who gives up U.S. citizenship...

Question 5

Given the following information, determine whether Greta, an alien, is a U.S. resident for Year 3. Greta cannot establish a tax home in or a closer connection to a foreign country.

Accepted Answer

In general, for Federal income tax purpo...

Question 6

BrazilCo, Inc., a foreign corporation with a U.S. trade or business, has U.S.-source income as follows.
Dividend income from unrelated investment activities $ 50,000
Net U.S.-source effectively connected income 600,000
Determine BrazilCo's total U.S. tax liability for the year, assuming a 35% corporate rate and no tax treaty.
BrazilCo leaves its U.S. branch profits invested in the United States, and it does not otherwise repatriate any of its U.S. assets during the year.

Accepted Answer

BrazilCo's U.S. tax ...

Question 7

Chipper, Inc., a U.S. corporation, reports worldwide taxable income of $1 million, including a $300,000 dividend from Emma, Inc., a foreign corporation. Chipper's U.S. tax liability before FTC is $340,000. Chipper owns 20% of Emma. Emma's E & P after taxes is $8 million and it has paid foreign taxes of $2 million attributable to that E & P. If Chipper elects the FTC, its U.S. gross income with regard to the dividend from Emma is:

Accepted Answer

A)   $300,000.
B)   $340,000.
C)   $375,000.
D)   $400,000.E) A) and D)
F) All of the above

Question 8

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" foreign­source income that is subject to a tax rate higher than the U.S. tax rate.
D)   Generating "same basket" foreign­source income that is subject to a tax rate lower than the U.S. tax rate.E) A) and B)
F) None of the above

Question 9

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 10

USCo, a U.S. corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld. Its worldwide taxable income is $1,500,000 and its U.S. tax liability before the foreign tax credit is $525,000. What is USCo's allowed foreign tax credit?

Accepted Answer

A)   $70,000
B)   $175,000
C)   $245,000
D)   $770,000E) B) and C)
F) All of the above

Question 11

A non-U.S. subsidiary whose income may be taxed to the U.S. parent before repatriation.

Accepted Answer

The answer of A non-U.S. subsidiary whose income may be...

Question 12

Which of the following determinations requires knowing the amount of one's foreign­source gross income?

Accepted Answer

A)   Itemized deductions.
B)   Foreign tax credit.
C)   Calculation of a U.S. person's total taxable income.
D)   Calculation of a U.S. person's deductible interest expense.E) A) and B)
F) B) and D)

Question 13

Wood, a U.S. corporation, owns 30% of Hout, a foreign corporation. The remaining 70% of Hout is owned by other foreign corporations not controlled by Wood. Hout's functional currency is the euro. Wood receives a 50,000€ distribution from Hout. If the average exchange rate for the E & P to which the dividend is attributed is 1.2€: $1, the exchange rate at year end is .95€: $1, and on the date of the dividend payment the exchange rate is 1.1€: $1, what is Wood's tax result from the distribution?

Accepted Answer

A)   Wood receives a dividend of $45,455 and realizes an exchange gain of $3,788 [$45,455 minus $41,667 (50,000€/1.2) ].
B)   Wood receives a dividend of $52,632 (50,000€/.95)  with no exchange gain or loss.
C)   Wood receives a dividend of $41,667 and realizes an exchange loss of $3,788 ($41,667 minus $45,455) .
D)   Wood receives a dividend of $45,455 (50,000€/1.1)  with no exchange gain or loss.E) A) and C)
F) A) and B)

Question 14

Magdala is a citizen of Italy and does not have permanent resident status in the United States. During the last three years she has spent a number of days in the United States. Current year - 120 days First prior year - 150 days
Second prior year - 150 days
Is Magdala treated as a U.S. resident for the current year?

Accepted Answer

A)   Yes, because Magdala was present in the United States at least 31 days during the current year and 195 days during the current and prior two years (using the appropriate fractions for the prior years) .
B)   No, because Magdala is a citizen of Italy.
C)   No, because Magdala was not present in the United States at least 183 days during the current year.
D)   No, because although Magdala was present in the United States at least 31 days during the current year, she was not present at least 183 days in a single year during the current or prior two years.E) A) and D)
F) None of the above

Question 15

Goolsbee, Inc., a U.S. corporation, generates U.S.­source and foreign­source gross income. Goolsbee's assets (tax book value) are as follows.
  Goolsbee incurs interest expense of $200,000. Using the asset method and the tax book value, apportion interest expense to foreign-source income.

Accepted Answer

Using the asset method and the...

Question 16

Which of the following statements regarding the translation of foreign income taxes is true?

Accepted Answer

A)   Translation of foreign taxes into U.S. dollars helps manage the U.S. balance of trade.
B)   Foreign taxes are translated into U.S. dollars only when such translation provides a tax benefit to the taxpayer.
C)   Foreign taxes typically are paid in a foreign currency and, thus, must be converted to U.S. dollars when used as a FTC on a U.S. return.
D)   Translation of foreign taxes into U.S. dollars encourages foreign corporations to set up operations in the United States.E) A) and C)
F) A) and B)

Question 17

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Accepted Answer

A)   Jen, Kathy, Leslie, David, Ben, and Mike are all U.S. citizens.
B)   Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. David is married to Kathy. Mike is a foreign resident and citizen.
C)   Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. Ben is Mike's son. Mike is a foreign resident and citizen.
D)   Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. Mike is a foreign resident and citizen.E) B) and C)
F) B) and D)

Question 18

Which of the following foreign taxes paid by a U.S. corporation may be eligible for the foreign tax credit?

Accepted Answer

A)   Real property taxes.
B)   Value added taxes.
C)   Sales taxes.
D)   Dividend withholding taxes.E) A) and B)
F) None of the above

Question 19

Rule that requires determination of the dividend equivalent amount.

Accepted Answer

The answer of Rule that requires determination of the dividend...

Question 20

The U.S. system for taxing income earned inside its borders by non-U.S. persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

Accepted Answer

A) True 
 B)False

Exam 9: Taxation of International Transactions

Correct Answer
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BrazilCo's U.S. tax ...
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Which of the following determinations requires knowing the amount of one's foreignsource gross income?

Correct Answer
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A non-U.S. subsidiary whose income may be taxed to the U.S. parent before repatriation.

Correct Answer
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Correct Answer
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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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In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Correct Answer
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The U.S. system for taxing income earned inside its borders by non-U.S. persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

Correct Answer
verified

Dividends received from a domestic corporation are totally U.S. source:

Correct Answer
verified

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
verified

Which of the following foreign taxes paid by a U.S. corporation may be eligible for the foreign tax credit?

Correct Answer
verified

Given the following information, determine whether Greta, an alien, is a U.S. resident for Year 3. Greta cannot establish a tax home in or a closer connection to a foreign country.

Correct Answer
verified
In general, for Federal income tax purpo...
View 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 Answer
verified
Generate "same basket" foreignsource in...
View Answer

Rule that requires determination of the dividend equivalent amount.

Correct Answer
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Correct Answer
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An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Correct Answer
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Correct Answer
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Goolsbee, Inc., a U.S. corporation, generates U.S.source and foreignsource gross income. Goolsbee's assets (tax book value) are as follows. Goolsbee incurs interest expense of $200,000. Using the asset method and the tax book value, apportion interest expense to foreign-source income.

Correct Answer
verified
Using the asset method and the...
View Answer

Which of the following statements regarding the translation of foreign income taxes is true?

Correct Answer
verified

USCo, a U.S. corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld. Its worldwide taxable income is $1,500,000 and its U.S. tax liability before the foreign tax credit is $525,000. What is USCo's allowed foreign tax credit?

Correct Answer
verified

Exam 9: Taxation of International Transactions

Correct AnswerverifiedBrazilCo's U.S. tax ...View AnswerShow Answer

Which of the following determinations requires knowing the amount of one's foreign­source gross income?

Correct AnswerverifiedShow Answer

A non-U.S. subsidiary whose income may be taxed to the U.S. parent before repatriation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Correct AnswerverifiedShow Answer

The U.S. system for taxing income earned inside its borders by non-U.S. persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

Correct AnswerverifiedShow Answer

Dividends received from a domestic corporation are totally U.S. source:

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 foreign taxes paid by a U.S. corporation may be eligible for the foreign tax credit?

Correct AnswerverifiedShow Answer

Given the following information, determine whether Greta, an alien, is a U.S. resident for Year 3. Greta cannot establish a tax home in or a closer connection to a foreign country.

Correct AnswerverifiedIn general, for Federal income tax purpo...View AnswerShow 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 AnswerverifiedGenerate "same basket" foreign­source in...View AnswerShow Answer

Rule that requires determination of the dividend equivalent amount.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goolsbee, Inc., a U.S. corporation, generates U.S.­source and foreign­source gross income. Goolsbee's assets (tax book value) are as follows. Goolsbee incurs interest expense of $200,000. Using the asset method and the tax book value, apportion interest expense to foreign-source income.

Correct AnswerverifiedUsing the asset method and the...View AnswerShow Answer

Which of the following statements regarding the translation of foreign income taxes is true?

Correct AnswerverifiedShow Answer

USCo, a U.S. corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld. Its worldwide taxable income is $1,500,000 and its U.S. tax liability before the foreign tax credit is $525,000. What is USCo's allowed foreign tax credit?

Correct AnswerverifiedShow Answer

Correct Answer
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BrazilCo's U.S. tax ...
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Which of the following determinations requires knowing the amount of one's foreignsource gross income?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In general, for Federal income tax purpo...
View Answer

Correct Answer
verified
Generate "same basket" foreignsource in...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Goolsbee, Inc., a U.S. corporation, generates U.S.source and foreignsource gross income. Goolsbee's assets (tax book value) are as follows. Goolsbee incurs interest expense of $200,000. Using the asset method and the tax book value, apportion interest expense to foreign-source income.

Correct Answer
verified
Using the asset method and the...
View Answer

Correct Answer
verified

Correct Answer
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