Question 1

In addition to having very low effective tax rates,which of the following is also a characteristic of tax havens?

Accepted Answer

A) lack of transparency in financial reporting 
B) lack of effective exchange of information 
C) absence of substantial activities requirement 
D) all of the above 
A) lack of transparency in financial reporting 
B) lack of effective exchange of information 
C) absence of substantial activities requirement 
D) all of the above D

Question 2

Which of the following is the most important type of Subpart F income?

Accepted Answer

A) Income from countries engaged in international boycotts 
B) Income from foreign base companies 
C) Income from insurance of U.S.risks 
D) Income from illegal payments 
A) Income from countries engaged in international boycotts 
B) Income from foreign base companies 
C) Income from insurance of U.S.risks 
D) Income from illegal payments B

Question 3

What is the U.S.policy concerning taxing income of a foreign branch of a U.S.corporation?

Accepted Answer

A) Tax is imposed on the foreign branch income in the year it is earned. 
B) Tax is paid on the foreign branch's income when the profits are returned to the U.S.parent as dividends. 
C) The government of the U.S.does not tax foreign source income. 
D) Tax credits for losses incurred by the foreign branch are recognized by the parent currently,but taxes on profits are deferred until dividends are paid. 
A) Tax is imposed on the foreign branch income in the year it is earned. 
B) Tax is paid on the foreign branch's income when the profits are returned to the U.S.parent as dividends. 
C) The government of the U.S.does not tax foreign source income. 
D) Tax credits for losses incurred by the foreign branch are recognized by the parent currently,but taxes on profits are deferred until dividends are paid. A

Question 4

What is the U.S.policy concerning taxing income of a U.S.corporation's foreign subsidiary?

Accepted Answer

A) Tax is imposed on the foreign subsidiary income in the year it is earned. 
B) Tax is paid on the foreign subsidiary's income when the profits are returned to the U.S.parent as dividends. 
C) The government of the U.S.does not tax foreign source income. 
D) Tax credits for losses incurred by the foreign subsidiary are recognized by the parent currently,but taxes on profits are deferred until dividends are paid. 
A) Tax is imposed on the foreign subsidiary income in the year it is earned. 
B) Tax is paid on the foreign subsidiary's income when the profits are returned to the U.S.parent as dividends. 
C) The government of the U.S.does not tax foreign source income. 
D) Tax credits for losses incurred by the foreign subsidiary are recognized by the parent currently,but taxes on profits are deferred until dividends are paid.

Question 5

What is a tax haven?

Accepted Answer

A) A jurisdiction where taxes are abnormally low 
B) A location where tax cheats live to escape prosecution 
C) A tax jurisdiction where world-wide tax is eliminated 
D) Locations that provide tax-based incentives to corporations 
A) A jurisdiction where taxes are abnormally low 
B) A location where tax cheats live to escape prosecution 
C) A tax jurisdiction where world-wide tax is eliminated 
D) Locations that provide tax-based incentives to corporations

Question 6

What term is used for the characteristic of a tax system whereby a company's decisions to invest domestically or abroad is not affected by taxation?

Accepted Answer

A) foreign tax credit 
B) unbiased 
C) capital export neutrality 
D) capital investment irrelevance 
A) foreign tax credit 
B) unbiased 
C) capital export neutrality 
D) capital investment irrelevance

Question 7

What term is used to describe a foreign corporation in which U.S.shareholders hold more than 50% of the voting power or fair market value of the corporation's stock?

Accepted Answer

A) branch 
B) holding company 
C) controlled foreign corporation 
D) tax-exempt foreign corporation 
A) branch 
B) holding company 
C) controlled foreign corporation 
D) tax-exempt foreign corporation

Question 8

An indirect foreign tax credit arises when:

Accepted Answer

A) taxes paid by a parent on foreign branch income is deducted from taxes owed to the parent's home country. 
B) taxes paid by a foreign subsidiary are taken as a credit against a parent's taxes when dividends are received from the subsidiary. 
C) taxing jurisdictions agree to share the taxes paid by a foreign subsidiary. 
D) a foreign taxing jurisdiction does not tax a subsidiary within its jurisdiction and allows the parent country to tax the foreign source income. 
A) taxes paid by a parent on foreign branch income is deducted from taxes owed to the parent's home country. 
B) taxes paid by a foreign subsidiary are taken as a credit against a parent's taxes when dividends are received from the subsidiary. 
C) taxing jurisdictions agree to share the taxes paid by a foreign subsidiary. 
D) a foreign taxing jurisdiction does not tax a subsidiary within its jurisdiction and allows the parent country to tax the foreign source income.

Question 9

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 10

What causes double taxation?

Accepted Answer

A) a taxpayer being subject to tax laws in multiple jurisdictions 
B) profits increasing excessively from year to year 
C) penalties imposed by a taxing authority for non-payment of taxes 
D) none of the above 
A) a taxpayer being subject to tax laws in multiple jurisdictions 
B) profits increasing excessively from year to year 
C) penalties imposed by a taxing authority for non-payment of taxes 
D) none of the above

Question 11

Under the American Jobs Creation Act of 2004,how many FTC baskets are used to classify foreign source income?

Accepted Answer

A) 9 
B) 2 
C) 12 
D) 11 
A) 9 
B) 2 
C) 12 
D) 11

Question 12

Which of the following is a benefit of tax treaties?

Accepted Answer

A) They can be used to define tax jurisdiction. 
B) They may be used to reduce withholding taxes. 
C) They facilitate the exchange of information between countries. 
D) all of the above 
A) They can be used to define tax jurisdiction. 
B) They may be used to reduce withholding taxes. 
C) They facilitate the exchange of information between countries. 
D) all of the above

Question 13

What is a tax holiday?

Accepted Answer

A) A trip made to tax havens to buy goods free of sales tax 
B) The time between the date of filing the corporate income tax return and the date when taxes are due to be paid 
C) This is a period of time when corporations are relieved of paying various taxes. 
D) This is the deadline for filing federal tax returns. 
A) A trip made to tax havens to buy goods free of sales tax 
B) The time between the date of filing the corporate income tax return and the date when taxes are due to be paid 
C) This is a period of time when corporations are relieved of paying various taxes. 
D) This is the deadline for filing federal tax returns.

Question 14

Why might a developing country offer a tax holiday?

Accepted Answer

A) to encourage job creation 
B) to encourage foreign investment in the country 
C) to stimulate foreign trade 
D) all of the above 
A) to encourage job creation 
B) to encourage foreign investment in the country 
C) to stimulate foreign trade 
D) all of the above

Question 15

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 tax havens 
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 tax havens 
D) foreign source income that is exempt from U.S.taxation

Question 16

What is a major limitation to the apparent incentive of tax holidays?

Accepted Answer

A) If a MNC is taxed on worldwide income,it will eventually pay tax on the foreign income when it is repatriated. 
B) Income earned by multinational corporations must remain in the foreign country offering the tax holiday. 
C) The tax holidays are only available to large multinational corporations. 
D) Tax holidays are offered only by governments with the ten weakest economies. 
A) If a MNC is taxed on worldwide income,it will eventually pay tax on the foreign income when it is repatriated. 
B) Income earned by multinational corporations must remain in the foreign country offering the tax holiday. 
C) The tax holidays are only available to large multinational corporations. 
D) Tax holidays are offered only by governments with the ten weakest economies.

Question 17

Under the U.S.model tax treaty,which of the following statements is correct?

Accepted Answer

A) Interest and royalties are exempt from withholding. 
B) Dividends are subject to a maximum 20% withholding. 
C) Interest and royalties are subject to a maximum 15% withholding. 
D) No passive income is exempt from withholding. 
A) Interest and royalties are exempt from withholding. 
B) Dividends are subject to a maximum 20% withholding. 
C) Interest and royalties are subject to a maximum 15% withholding. 
D) No passive income is exempt from withholding.

Question 18

What approach is taken by the United States of America relative to taxing income?

Accepted Answer

A) citizenship 
B) residence 
C) both citizenship and residence 
D) none of the above 
A) citizenship 
B) residence 
C) both citizenship and residence 
D) none of the above

Question 19

To calculate U.S.tax,what exchange rate must be used to translate foreign branch net income?

Accepted Answer

A) current rate 
B) rate at the beginning of the year 
C) average rate for the year 
D) rate at the end of the year 
A) current rate 
B) rate at the beginning of the year 
C) average rate for the year 
D) rate at the end of the year

Question 20

In general,why do countries wish to avoid double taxation on corporations?

Accepted Answer

A) The calculations of the taxes are excessively complex. 
B) It discourages foreign direct investment. 
C) Enforcement of the tax law becomes excessively burdensome. 
D) It contributes to accounting diversity. 
A) The calculations of the taxes are excessively complex. 
B) It discourages foreign direct investment. 
C) Enforcement of the tax law becomes excessively burdensome. 
D) It contributes to accounting diversity.

In addition to having very low effective tax rates,which of the following is also a characteristic of tax havens?

Which of the following is the most important type of Subpart F income?

What is the U.S.policy concerning taxing income of a foreign branch of a U.S.corporation?

What is the U.S.policy concerning taxing income of a U.S.corporation's foreign subsidiary?

What is a tax haven?

What term is used for the characteristic of a tax system whereby a company's decisions to invest domestically or abroad is not affected by taxation?

What term is used to describe a foreign corporation in which U.S.shareholders hold more than 50% of the voting power or fair market value of the corporation's stock?

An indirect foreign tax credit arises when:

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

What causes double taxation?

Under the American Jobs Creation Act of 2004,how many FTC baskets are used to classify foreign source income?

Which of the following is a benefit of tax treaties?

What is a tax holiday?

Why might a developing country offer a tax holiday?

What is "Subpart F" income?

What is a major limitation to the apparent incentive of tax holidays?

Under the U.S.model tax treaty,which of the following statements is correct?

What approach is taken by the United States of America relative to taxing income?

To calculate U.S.tax,what exchange rate must be used to translate foreign branch net income?

In general,why do countries wish to avoid double taxation on corporations?

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

In addition to having very low effective tax rates,which of the following is also a characteristic of tax havens?

Which of the following is the most important type of Subpart F income?

What is the U.S.policy concerning taxing income of a foreign branch of a U.S.corporation?

What is the U.S.policy concerning taxing income of a U.S.corporation's foreign subsidiary?

What is a tax haven?

What term is used for the characteristic of a tax system whereby a company's decisions to invest domestically or abroad is not affected by taxation?

What term is used to describe a foreign corporation in which U.S.shareholders hold more than 50% of the voting power or fair market value of the corporation's stock?

An indirect foreign tax credit arises when:

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

What causes double taxation?

Under the American Jobs Creation Act of 2004,how many FTC baskets are used to classify foreign source income?

Which of the following is a benefit of tax treaties?

What is a tax holiday?

Why might a developing country offer a tax holiday?

What is "Subpart F" income?

What is a major limitation to the apparent incentive of tax holidays?

Under the U.S.model tax treaty,which of the following statements is correct?

What approach is taken by the United States of America relative to taxing income?

To calculate U.S.tax,what exchange rate must be used to translate foreign branch net income?

In general,why do countries wish to avoid double taxation on corporations?

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