Question 1

Income tax treaties 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 2

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. 
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.

Question 3

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

Accepted Answer

A) True 
 B)False

Question 4

Carol, a citizen and resident of Adagio, reports gross income that is effectively connected with a U.S. business. No deductions are allowed against this income, and Carol's U.S. tax rate is a flat 30 percent.

Accepted Answer

A) True 
 B)False

Question 5

The following income of a foreign corporation is not subject to the regular U.S. corporate income tax rates.

Accepted Answer

A) FIRPTA gains. 
B) Capital gains effectively connected with a U.S. trade or business. 
C) Net long-term capital gains, where no U.S. trade or business exists. 
D) Fixed, determinable, annual or periodic (FDAP) income effectively connected with a U.S. trade or business. 
A) FIRPTA gains. 
B) Capital gains effectively connected with a U.S. trade or business. 
C) Net long-term capital gains, where no U.S. trade or business exists. 
D) Fixed, determinable, annual or periodic (FDAP) income effectively connected with a U.S. trade or business.

Question 6

Freiburg, Ltd., a foreign corporation, operates a U.S. branch that reports effectively connected U.S. earnings and profits (after income taxes) of $900,000 for the tax year. The branch's U.S. net equity at the beginning of the tax year is $3.5 million and at the end of the tax year is $2 million. Freiburg is organized in a nontreaty country. Compute Freiburg's branch profits tax for the year.

Accepted Answer

The branch profits tax is equal to 30% o

Question 7

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

Question 8

Columbia, Inc., a U.S. corporation, receives a $150,000 cash dividend from Starke, Ltd. Columbia owns 15% of Starke. Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P. What is Columbia's gross income related to the Starke dividend?

Accepted Answer

A) $206,250 
B) $150,000 
C) $56,250 
D) $22,500 
A) $206,250 
B) $150,000 
C) $56,250 
D) $22,500

Question 9

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 10

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

Question 11

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. 
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.

Question 12

Given the following information, determine if FanCo, a foreign corporation, is a CFC. $\begin{array}{lcl}
\text { Shareholders of } & \text { Voting } & \
\text { foreign corp oration } & \text { power } & \text { Classification } \
\text { Murray } & 24 \% & \text { U.S. person } \
\text { Nancy } & 20 \% & \text { U.S. person } \
\text { Otto } & 40 \% & \text { Foreign person } \
\text { Patricia } & 16 \% & \text { U.S. person }
\end{array}$ Patricia is Murray's daughter.

Accepted Answer

​ @#IMG-DLM& 
​
Murray, Nancy, and Patricia are U.

Question 13

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 14

Match the definition with the correct term.
-A business operation that accounts for profits and losses using its functional currency.

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 15

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 16

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. 
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.

Question 17

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Upon repatriation to a CFC, it does not create dividend income.

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 18

Match the definition with the correct term.
-An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Accepted Answer

A) Expatriate 
B) Resident 
C) Nonresident alien 
D) U.S. trade or business 
E) Branch profits tax
F)Effectively connected income 
A) Expatriate 
B) Resident 
C) Nonresident alien 
D) U.S. trade or business 
E) Branch profits tax
F)Effectively connected income

Question 19

Which of the following statements regarding the U.S. taxation of non-U.S. persons is true?

Accepted Answer

A) Non-U.S. persons never are subject to U.S. income tax. 
B) Non-U.S. persons are subject to U.S. income tax only on gains from U.S. real property. 
C) Non-U.S. persons can be subject to a withholding tax on U.S.-source portfolio income. 
D) Non-U.S. persons can be subject to a withholding tax on foreign-source portfolio income. 
A) Non-U.S. persons never are subject to U.S. income tax. 
B) Non-U.S. persons are subject to U.S. income tax only on gains from U.S. real property. 
C) Non-U.S. persons can be subject to a withholding tax on U.S.-source portfolio income. 
D) Non-U.S. persons can be subject to a withholding tax on foreign-source portfolio income.

Question 20

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

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

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

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

Carol, a citizen and resident of Adagio, reports gross income that is effectively connected with a U.S. business. No deductions are allowed against this income, and Carol's U.S. tax rate is a flat 30 percent.

The following income of a foreign corporation is not subject to the regular U.S. corporate income tax rates.

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.

Columbia, Inc., a U.S. corporation, receives a $150,000 cash dividend from Starke, Ltd. Columbia owns 15% of Starke. Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P. What is Columbia's gross income related to the Starke dividend?

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.

U.S. income tax treaties typically:

Given the following information, determine if FanCo, a foreign corporation, is a CFC. Shareholders of Voting foreign corp oration power Classification Murray 24\% U.S. person Nancy 20\% U.S. person Otto 40\% Foreign person Patricia 16\% U.S. person Patricia is Murray's daughter.

Match the definition with the correct term. -A business operation that accounts for profits and losses using its functional currency.

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.

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.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Upon repatriation to a CFC, it does not create dividend income.

Match the definition with the correct term. -An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Which of the following statements regarding the U.S. taxation of non-U.S. persons is true?

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.

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

Multi-State Corporate Taxations

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

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

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

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

Carol, a citizen and resident of Adagio, reports gross income that is effectively connected with a U.S. business. No deductions are allowed against this income, and Carol's U.S. tax rate is a flat 30 percent.

The following income of a foreign corporation is not subject to the regular U.S. corporate income tax rates.

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.

Columbia, Inc., a U.S. corporation, receives a $150,000 cash dividend from Starke, Ltd. Columbia owns 15% of Starke. Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P. What is Columbia's gross income related to the Starke dividend?

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.

U.S. income tax treaties typically:

Given the following information, determine if FanCo, a foreign corporation, is a CFC. Shareholders of Voting foreign corp oration power Classification Murray 24\% U.S. person Nancy 20\% U.S. person Otto 40\% Foreign person Patricia 16\% U.S. person Patricia is Murray's daughter.

Match the definition with the correct term. -A business operation that accounts for profits and losses using its functional currency.

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.

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.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Upon repatriation to a CFC, it does not create dividend income.

Match the definition with the correct term. -An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Which of the following statements regarding the U.S. taxation of non-U.S. persons is true?

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.

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters