Question 1

Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

Accepted Answer

A)  Intangibles income. 
B)  Passive income. 
C)  Business income. 
D)  None of the above are separate FTC limitation baskets. 
E)  All of the above are separate FTC limitation baskets. 
A)  Intangibles income. 
B)  Passive income. 
C)  Business income. 
D)  None of the above are separate FTC limitation baskets. 
E)  All of the above are separate FTC limitation baskets.

Question 2

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once
-A CFC's profits from sales of goods and services.

Accepted Answer

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 
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

Question 3

WorldCo, a foreign corporation not engaged in a U.S. trade or business, receives $50,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 78% of its income from foreign sources. How much of WorldCo's interest income is U.S. source?

Accepted Answer

A)  $0 
B)  $11,000 
C)  $39,000 
D)  $50,000 
A)  $0 
B)  $11,000 
C)  $39,000 
D)  $50,000

Question 4

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once
-Maximum years for a foreign tax credit carryforward.

Accepted Answer

A) Indirect credit 
B) Direct credit 
C) One 
D) Two 
E) Ten
F)Twenty
G)Gross-up (§ 78)
H)Overall foreign loss 
A) Indirect credit 
B) Direct credit 
C) One 
D) Two 
E) Ten
F)Twenty
G)Gross-up (§ 78)
H)Overall foreign loss

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

Match the definition with the correct term
-Treasury powers over transfer pricing.

Accepted Answer

A) Inbound 
B) Outbound 
C) Allocation and apportionment 
D) Qualified business unit 
E) Tax haven
F)Income tax treaty
G)Section 482 
A) Inbound 
B) Outbound 
C) Allocation and apportionment 
D) Qualified business unit 
E) Tax haven
F)Income tax treaty
G)Section 482

Question 7

Waldo, Inc., a U.S. corporation, owns 100% of Orion, Ltd., a foreign corporation. Orion earns only general basket income. During the current year, Orion paid Waldo a $5,000 dividend. The foreign tax credit associated with this dividend is $3,000. The foreign jurisdiction requires a withholding tax of 10%, so Waldo received only $4,500 in cash as a result of the dividend. What is Waldo's total U.S. gross income reported as a result of the $4,500 cash received?

Accepted Answer

A)  $8,000 
B)  $5,000 
C)  $4,500 
D)  $3,000 
A)  $8,000 
B)  $5,000 
C)  $4,500 
D)  $3,000

Question 8

ForCo, a non-U.S. corporation based in Aldonza, purchases widgets from USCo, Inc., its U.S. parent corporation. The widgets are sold by ForCo to an unrelated foreign corporation in Aldonza. The income from sale of the widgets by ForCo is Subpart F foreign base company sales income.

Accepted Answer

A) True 
 B)False

Question 9

Maxim, Inc., a U.S. corporation, reports worldwide taxable income of $8 million, including a $900,000 dividend from ForCo, a wholly-owned foreign corporation. ForCo's undistributed E & P are $15 million and it has paid $6 million of foreign income taxes attributable to these earnings. What is Maxim's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?

Accepted Answer

A)  $0 
B)  $360,000 
C)  $900,000 
D)  $6 million 
A)  $0 
B)  $360,000 
C)  $900,000 
D)  $6 million

Question 10

Julio, a nonresident alien, realizes a gain on the sale of commercial real estate located in Omaha. The real estate was sold to Mariana, Julio's cousin who is also a nonresident alien. Julio recognizes foreign-source income from the sale because his home country is not the U.S.

Accepted Answer

A) True 
 B)False

Question 11

Jilt, a non-U.S. corporation, not resident in a treaty country, operates a U.S. branch that earns effectively connected E & P of $4 million for the tax year. The branch increases its investments in U.S. property (its U.S. net equity) by $1,600,000. The branch pays a U.S. corporate income tax of $2,153,846. Jilt's branch profits tax is:

Accepted Answer

A)  $720,000. 
B)  $1,200,000. 
C)  $2,153,846. 
D)  $2,873,846. 
A)  $720,000. 
B)  $1,200,000. 
C)  $2,153,846. 
D)  $2,873,846.

Question 12

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. 
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.

Question 13

SilverCo, a U.S. corporation, incorporates its foreign branch in a § 351 exchange, creating GreenCo, a wholly owned foreign corporation. SilverCo transfers $200 in Yen (basis = $150) and $900 in land (basis = $925) to GreenCo. GreenCo uses these assets in carrying on a trade or business outside the United States. What gain or loss, if any, is recognized as a result of this transaction?

Accepted Answer

A)  ($25) 
B)  $0 
C)  $25 
D)  $50 
A)  ($25) 
B)  $0 
C)  $25 
D)  $50

Question 14

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 15

Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and foreign corporations are subject to tax at capital gains rates under FIRPTA.

Accepted Answer

A) True 
 B)False

Question 16

The transfer of the assets of a U.S. corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Accepted Answer

A) True 
 B)False

Question 17

ForCo, a foreign corporation not engaged in a U.S. trade or business, recognizes a $3 million gain from the sale of land located in the United States. The amount realized on the sale was $50 million. Absent any exceptions, what is the required withholding amount on the part of the purchaser of this land?

Accepted Answer

A)  $0 
B)  $300,000 
C)  $3 million 
D)  $5 million 
A)  $0 
B)  $300,000 
C)  $3 million 
D)  $5 million

Question 18

Which of the following determinations requires knowing the amount of one's foreign-source 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. 
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.

Question 19

The United States has in force income tax treaties with about 70 countries.

Accepted Answer

A) True 
 B)False

Question 20

USCo, a U.S. corporation, reports worldwide taxable income of $500,000, including a $100,000 dividend from ForCo, a wholly-owned foreign corporation. ForCo's undistributed earnings and profits are $1 million and it has paid $200,000 of foreign income taxes attributable to these earnings. What is USCo's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?

Accepted Answer

A)  $500,000 
B)  $200,000 
C)  $100,000 
D)  $20,000 
A)  $500,000 
B)  $200,000 
C)  $100,000 
D)  $20,000

Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once -A CFC's profits from sales of goods and services.

WorldCo, a foreign corporation not engaged in a U.S. trade or business, receives $50,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 78% of its income from foreign sources. How much of WorldCo's interest income is U.S. source?

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once -Maximum years for a foreign tax credit carryforward.

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.

Match the definition with the correct term -Treasury powers over transfer pricing.

ForCo, a non-U.S. corporation based in Aldonza, purchases widgets from USCo, Inc., its U.S. parent corporation. The widgets are sold by ForCo to an unrelated foreign corporation in Aldonza. The income from sale of the widgets by ForCo is Subpart F foreign base company sales income.

Julio, a nonresident alien, realizes a gain on the sale of commercial real estate located in Omaha. The real estate was sold to Mariana, Julio's cousin who is also a nonresident alien. Julio recognizes foreign-source income from the sale because his home country is not the U.S.

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

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.

Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and foreign corporations are subject to tax at capital gains rates under FIRPTA.

The transfer of the assets of a U.S. corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Which of the following determinations requires knowing the amount of one's foreign-source gross income?

The United States has in force income tax treaties with about 70 countries.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 9: Taxation of International Transactions

Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once -A CFC's profits from sales of goods and services.

WorldCo, a foreign corporation not engaged in a U.S. trade or business, receives $50,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 78% of its income from foreign sources. How much of WorldCo's interest income is U.S. source?

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once -Maximum years for a foreign tax credit carryforward.

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.

Match the definition with the correct term -Treasury powers over transfer pricing.

ForCo, a non-U.S. corporation based in Aldonza, purchases widgets from USCo, Inc., its U.S. parent corporation. The widgets are sold by ForCo to an unrelated foreign corporation in Aldonza. The income from sale of the widgets by ForCo is Subpart F foreign base company sales income.

Julio, a nonresident alien, realizes a gain on the sale of commercial real estate located in Omaha. The real estate was sold to Mariana, Julio's cousin who is also a nonresident alien. Julio recognizes foreign-source income from the sale because his home country is not the U.S.

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

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.

Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and foreign corporations are subject to tax at capital gains rates under FIRPTA.

The transfer of the assets of a U.S. corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Which of the following determinations requires knowing the amount of one's foreign-source gross income?

The United States has in force income tax treaties with about 70 countries.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters