Question 1

Controlled foreign corporations (CFC) will not be taxed on their foreign income currently if:

Accepted Answer

A) the foreign tax rate is less than 90% of the U.S.corporate income tax rate. 
B) Subpart F income is less than 70% of the CFC's total income. 
C) Subpart F income is less than 5% of the CFC's total income. 
D) None of the above 
A) the foreign tax rate is less than 90% of the U.S.corporate income tax rate. 
B) Subpart F income is less than 70% of the CFC's total income. 
C) Subpart F income is less than 5% of the CFC's total income. 
D) None of the above

Question 2

What is "Subpart F" income?

Accepted Answer

A) All foreign source income 
B) Foreign income that is not taxable by foreign jurisdictions 
C) Income that is easily moved to low-tax jurisdiction 
D) Foreign source income that is exempt from U.S.taxation 
A) All foreign source income 
B) Foreign income that is not taxable by foreign jurisdictions 
C) Income that is easily moved to low-tax jurisdiction 
D) Foreign source income that is exempt from U.S.taxation

Question 3

Jane, a citizen of Country X, received a corporate dividend in the amount of £10,000 from a company in the U.K.Country X did not tax Jane's dividend.Country X is using what kind of approach toward foreign source income?

Accepted Answer

A) Nationality approach 
B) Worldwide approach 
C) Legalistic approach 
D) Territorial approach 
A) Nationality approach 
B) Worldwide approach 
C) Legalistic approach 
D) Territorial approach

Question 4

Under U.S.tax law, what is the relationship between foreign tax credits and the different categories of foreign source income?

Accepted Answer

A) FTC from one category can offset taxes owed on other categories. 
B) Excess FTC from one category can be carried forward to offset future U.S.taxes payable on another category. 
C) Excess FTC from one category can be carried back to offset U.S.taxes paid on another category in the prior year. 
D) None of the above 
A) FTC from one category can offset taxes owed on other categories. 
B) Excess FTC from one category can be carried forward to offset future U.S.taxes payable on another category. 
C) Excess FTC from one category can be carried back to offset U.S.taxes paid on another category in the prior year. 
D) None of the above

Question 5

How do differences in the effective corporate tax rates between countries affect capital investment decisions?

Accepted Answer

A) Taxes have a negative effect on cash flows from the investment. 
B) Taxes determine the rate used in calculating the discounted cash flows. 
C) Taxes affect the amount of depreciation that will be recorded on the investment. 
D) All of the above 
A) Taxes have a negative effect on cash flows from the investment. 
B) Taxes determine the rate used in calculating the discounted cash flows. 
C) Taxes affect the amount of depreciation that will be recorded on the investment. 
D) All of the above

Question 6

Under U.S.tax law, what happens to excess foreign tax credit?

Accepted Answer

A) It reduces taxes on ordinary income in the current year. 
B) It can be carried back one year to calculate a refund on additional taxes paid in U.S.on foreign source income. 
C) It is lost unless the average foreign tax rate paid by the company in the future is greater than the U.S.tax rate. 
D) None of the above 
A) It reduces taxes on ordinary income in the current year. 
B) It can be carried back one year to calculate a refund on additional taxes paid in U.S.on foreign source income. 
C) It is lost unless the average foreign tax rate paid by the company in the future is greater than the U.S.tax rate. 
D) None of the above

Question 7

Because some countries have a lower withholding tax on interest than they do for dividends, multinational corporations may finance foreign operations with debt rather than equity.What additional reason may an MNC have for using this investment strategy?

Accepted Answer

A) Interest is generally a deductible expense, whereas dividends paid are not. 
B) Dividends require a cash outflow but interest does not. 
C) Cash flows from dividends must be discounted using the cost of capital, which is not the case for interest. 
D) All of the above 
A) Interest is generally a deductible expense, whereas dividends paid are not. 
B) Dividends require a cash outflow but interest does not. 
C) Cash flows from dividends must be discounted using the cost of capital, which is not the case for interest. 
D) All of the above

Controlled foreign corporations (CFC) will not be taxed on their foreign income currently if:

What is "Subpart F" income?

Jane, a citizen of Country X, received a corporate dividend in the amount of £10,000 from a company in the U.K.Country X did not tax Jane's dividend.Country X is using what kind of approach toward foreign source income?

Under U.S.tax law, what is the relationship between foreign tax credits and the different categories of foreign source income?

How do differences in the effective corporate tax rates between countries affect capital investment decisions?

Under U.S.tax law, what happens to excess foreign tax credit?

Because some countries have a lower withholding tax on interest than they do for dividends, multinational corporations may finance foreign operations with debt rather than equity.What additional reason may an MNC have for using this investment strategy?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

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Exam 11: International Taxation

Controlled foreign corporations (CFC) will not be taxed on their foreign income currently if:

What is "Subpart F" income?

Jane, a citizen of Country X, received a corporate dividend in the amount of £10,000 from a company in the U.K.Country X did not tax Jane's dividend.Country X is using what kind of approach toward foreign source income?

Under U.S.tax law, what is the relationship between foreign tax credits and the different categories of foreign source income?

How do differences in the effective corporate tax rates between countries affect capital investment decisions?

Under U.S.tax law, what happens to excess foreign tax credit?

Because some countries have a lower withholding tax on interest than they do for dividends, multinational corporations may finance foreign operations with debt rather than equity.What additional reason may an MNC have for using this investment strategy?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

Filters