Question 1

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. 
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.

Question 2

Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

Accepted Answer

A) True 
 B)False

Question 3

Liang, an NRA, is sent to the United States by Fuller Corporation, her foreign employer. She spends 50 days in the United States and earns $20,000 for a two-month period. This amount is attributable to 40 U.S. working days and 10 non-U.S. working days. Her employer does not have a U.S. trade or business and Liang spends no other time in the U.S. for the tax year. Liang's U.S.-source taxable income is:

Accepted Answer

A) $20,000. 
B) $16,000. 
C) $3,000. 
D) $0. 
A) $20,000. 
B) $16,000. 
C) $3,000. 
D) $0.

Question 4

An advance pricing agreement (APA) is used between:

Accepted Answer

A) Two or more governments. 
B) Two related taxpayers. 
C) The taxpayer and the IRS. 
D) The IRS and U.S. taxing authorities. 
A) Two or more governments. 
B) Two related taxpayers. 
C) The taxpayer and the IRS. 
D) The IRS and U.S. taxing authorities.

Question 5

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Number of foreign tax credit limitation baskets.

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 6

USCo, a U.S. corporation, reports worldwide taxable income of $1,500,000, including a $300,000 dividend from ForCo, a wholly-owned foreign corporation. ForCo's undistributed earnings and profits are $15 million and it has paid $10 million 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) $200,000 
B) $300,000 
C) $10 million 
D) $15 million 
A) $200,000 
B) $300,000 
C) $10 million 
D) $15 million

Question 7

Goolsbee, Inc., a U.S. corporation, generates U.S.-source and foreign-source gross income. Goolsbee's assets (tax book value) are as follows. $\begin{array}{lr}
\text { Generating U.S.-source income } & \$ 15,000,000 \
\text { Generating foreign-source income } & 25,000,000 \
\text { Total } &\$ 40,000,000
\end{array}$ ​
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 8

In allocating interest expense between U.S. and foreign sources, a taxpayer elects to use either the tax basis of the income-producing assets or their fair market values.

Accepted Answer

A) True 
 B)False

Question 9

Wellington, Inc., a U.S. corporation, owns 30% of a CFC that has $50 million of earnings and profits for the current year. Included in that amount is $20 million of Subpart F income. Wellington has been a CFC for the entire year and makes no distributions in the current year. Wellington must include in gross income (before any § 78 gross-up):

Accepted Answer

A) $0. 
B) $6 million. 
C) $20 million. 
D) $50 million. 
A) $0. 
B) $6 million. 
C) $20 million. 
D) $50 million.

Question 10

Luisa, a non-U.S. person with a green card, spends the following days in the United States. $\begin{array}{ll}
\text { Year } 1 & 360 \text { days } \
\text { Year } 2 & 210 \text { days } \
\text { Year } 3 & 30 \text { days }
\end{array}$ 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. 
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.

Question 11

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. 
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.

Question 12

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. 
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.

Question 13

Match the definition with the correct term.
-Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

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 14

In international corporate income taxation, what are the uses of the "sourcing rules" in computing Federal taxable income?

Accepted Answer

The sourcing of income and deductions in

Question 15

Which of the following statements regarding the sourcing of gross income is true?

Accepted Answer

A) Non-U.S. persons not engaged in a U.S. trade or business are indifferent as to whether any of their income is U.S. source. 
B) All income earned by non-U.S. persons not engaged in a U.S. trade or business is treated as foreign source. 
C) U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S. trade or business. 
D) Certain U.S.-source investment income earned by non-U.S. persons not engaged in a U.S. trade or business may be subject to a U.S. withholding tax. 
A) Non-U.S. persons not engaged in a U.S. trade or business are indifferent as to whether any of their income is U.S. source. 
B) All income earned by non-U.S. persons not engaged in a U.S. trade or business is treated as foreign source. 
C) U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S. trade or business. 
D) Certain U.S.-source investment income earned by non-U.S. persons not engaged in a U.S. trade or business may be subject to a U.S. withholding tax.

Question 16

Winnie, Inc., a U.S. corporation, receives a dividend of $400,000 from a non-CFC foreign corporation. Deemed-paid foreign taxes attributable to the dividend are $120,000. If Winnie elects the FTC, its gross income attributable to this dividend is $400,000.

Accepted Answer

A) True 
 B)False

Question 17

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. 
A) Real property taxes. 
B) Value added taxes. 
C) Sales taxes. 
D) Dividend withholding taxes.

Question 18

Which of the following statements is true, regarding the sourcing of dividend income?

Accepted Answer

A) Dividends are sourced based on the residence of the recipient. 
B) Dividends from a U.S. corporation are U.S.-source based on the percentage of U.S.-source income earned by the U.S. payor. 
C) Dividends from a U.S. corporation are U.S. source, without regard to where the U.S. corporation generated the E & P. 
D) Dividends from a U.S. corporation are foreign-source based on the percentage of foreign-source income earned by the U.S. payor. 
A) Dividends are sourced based on the residence of the recipient. 
B) Dividends from a U.S. corporation are U.S.-source based on the percentage of U.S.-source income earned by the U.S. payor. 
C) Dividends from a U.S. corporation are U.S. source, without regard to where the U.S. corporation generated the E & P. 
D) Dividends from a U.S. corporation are foreign-source based on the percentage of foreign-source income earned by the U.S. payor.

Question 19

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 20

Discuss the primary purposes of income tax treaties.

Accepted Answer

The primary purpose of an income tax tre

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

Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

An advance pricing agreement (APA) is used between:

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Number of foreign tax credit limitation baskets.

In allocating interest expense between U.S. and foreign sources, a taxpayer elects to use either the tax basis of the income-producing assets or their fair market values.

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:

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

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

Match the definition with the correct term. -Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

In international corporate income taxation, what are the uses of the "sourcing rules" in computing Federal taxable income?

Which of the following statements regarding the sourcing of gross income is true?

Winnie, Inc., a U.S. corporation, receives a dividend of $400,000 from a non-CFC foreign corporation. Deemed-paid foreign taxes attributable to the dividend are $120,000. If Winnie elects the FTC, its gross income attributable to this dividend is $400,000.

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

Which of the following statements is true, regarding the sourcing of dividend income?

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.

Discuss the primary purposes of income tax treaties.

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

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

Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

An advance pricing agreement (APA) is used between:

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Number of foreign tax credit limitation baskets.

In allocating interest expense between U.S. and foreign sources, a taxpayer elects to use either the tax basis of the income-producing assets or their fair market values.

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:

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

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

Match the definition with the correct term. -Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

In international corporate income taxation, what are the uses of the "sourcing rules" in computing Federal taxable income?

Which of the following statements regarding the sourcing of gross income is true?

Winnie, Inc., a U.S. corporation, receives a dividend of $400,000 from a non-CFC foreign corporation. Deemed-paid foreign taxes attributable to the dividend are $120,000. If Winnie elects the FTC, its gross income attributable to this dividend is $400,000.

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

Which of the following statements is true, regarding the sourcing of dividend income?

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.

Discuss the primary purposes of income tax treaties.

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