Question 1

Which of the following statements regarding income sourcing is not correct?

Accepted Answer

A) Concerning the foreign tax credit, most U.S. persons benefit from earning low-tax foreign-source income. 
B) Foreign persons generally benefit from avoiding U.S.-source income classification. 
C) U.S. persons are not concerned with source of income because all their income is subject to U.S. tax under a worldwide system. 
D) Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States. 
A) Concerning the foreign tax credit, most U.S. persons benefit from earning low-tax foreign-source income. 
B) Foreign persons generally benefit from avoiding U.S.-source income classification. 
C) U.S. persons are not concerned with source of income because all their income is subject to U.S. tax under a worldwide system. 
D) Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States.

Question 2

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 3

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 4

WaterCo, a domestic corporation, purchases inventory for resale from unrelated distributors outside the U.S. It resells this inventory to U.S. customers, with title passing inside the United States. What is the source of WaterCo's inventory sales income?

Accepted Answer

A) 100% U.S. source. 
B) 100% foreign source. 
C) 50% U.S. source and 50% foreign source. 
D) 50% foreign source and 50% sourced based on location of manufacturing assets. 
A) 100% U.S. source. 
B) 100% foreign source. 
C) 50% U.S. source and 50% foreign source. 
D) 50% foreign source and 50% sourced based on location of manufacturing assets.

Question 5

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. 
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.

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

Zhang, an NRA who is not a resident of a treaty country, receives taxable dividends of $50,000 from U.S. corporations. Zhang does not conduct a U.S. trade or business. Zhang's dividends are subject to withholding by the payor of:

Accepted Answer

A) 35%. 
B) 30%. 
C) 15%. 
D) 0%. 
A) 35%. 
B) 30%. 
C) 15%. 
D) 0%.

Which of the following statements regarding income sourcing is not correct?

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.

WaterCo, a domestic corporation, purchases inventory for resale from unrelated distributors outside the U.S. It resells this inventory to U.S. customers, with title passing inside the United States. What is the source of WaterCo's inventory sales income?

Which of the following is not a foreign person?

Zhang, an NRA who is not a resident of a treaty country, receives taxable dividends of $50,000 from U.S. corporations. Zhang does not conduct a U.S. trade or business. Zhang's dividends are subject to withholding by the payor of:

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 statements regarding income sourcing is not correct?

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.

WaterCo, a domestic corporation, purchases inventory for resale from unrelated distributors outside the U.S. It resells this inventory to U.S. customers, with title passing inside the United States. What is the source of WaterCo's inventory sales income?

Which of the following is not a foreign person?

Zhang, an NRA who is not a resident of a treaty country, receives taxable dividends of $50,000 from U.S. corporations. Zhang does not conduct a U.S. trade or business. Zhang's dividends are subject to withholding by the payor of:

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