Question 1

Under what condition may it be to the taxpayer's advantage to take a deduction for total foreign taxes paid rather than a tax credit for foreign income taxes?

Accepted Answer

A) if the foreign income tax rate is greater than the U.S.federal income tax rate 
B) if the foreign income tax rate is less than the U.S.federal income tax rate 
C) if foreign source income is less than domestic income 
D) if foreign taxes other than income taxes are substantial 
A) if the foreign income tax rate is greater than the U.S.federal income tax rate 
B) if the foreign income tax rate is less than the U.S.federal income tax rate 
C) if foreign source income is less than domestic income 
D) if foreign taxes other than income taxes are substantial

Question 2

Under U.S.tax laws,how are taxes paid by U.S.corporations to foreign governments treated?

Accepted Answer

A) Total foreign taxes paid are deductions in calculating taxable income. 
B) Foreign income taxes paid are credits against U.S.taxes owed. 
C) Taxpayers may choose between (
A) and (
B) stated above. 
D) none of the above 
A) Total foreign taxes paid are deductions in calculating taxable income. 
B) Foreign income taxes paid are credits against U.S.taxes owed. 
C) Taxpayers may choose between (
A) and (
B) stated above. 
D) none of the above

Question 3

What is the international norm for determining tax jurisdiction?

Accepted Answer

A) residence takes precedence over source 
B) citizenship takes precedence over residence 
C) source takes precedence over residence 
D) domestic takes precedence over foreign 
A) residence takes precedence over source 
B) citizenship takes precedence over residence 
C) source takes precedence over residence 
D) domestic takes precedence over foreign

Question 4

What is meant by the term "thin capitalization?"

Accepted Answer

A) undervaluing foreign investments 
B) using as little debt financing as a country will allow 
C) minimizing the amount of equity capital used to fund foreign operations 
D) creating transparency in the methods used to fund foreign operations 
A) undervaluing foreign investments 
B) using as little debt financing as a country will allow 
C) minimizing the amount of equity capital used to fund foreign operations 
D) creating transparency in the methods used to fund foreign operations

Question 5

The subsidiary of a U.S.corporation located in Country Y generated income of $1,000,000 on which it paid $200,000 in taxes to Country Y. The subsidiary paid a dividend to the U.S.parent of $150,000. How much tax is currently owed to the U.S.government if the federal tax rate is 35%?

Accepted Answer

A) $35,625 
B) $28,125 
C) $52,500 
D) $32,500 
A) $35,625 
B) $28,125 
C) $52,500 
D) $32,500

Question 6

The subsidiary of a U.S.corporation located in Country Y generated income of $1,000,000 on which it paid $400,000 (40%)in taxes to Country Y. The subsidiary paid a dividend to the U.S.parent of $54,000. How much tax is currently owed to the U.S.government if the federal tax rate is 35%?

Accepted Answer

A) $18,900 
B) $350,000 
C) $140,000 
D) $0 
A) $18,900 
B) $350,000 
C) $140,000 
D) $0

Question 7

Under the citizenship approach of tax jurisdiction,if Company A,incorporated in Country X,was based in Country Y and earned dividends in Country Z,the dividends would be ultimately taxed in which country?

Accepted Answer

A) Country Z 
B) Country Y 
C) Country X 
D) none of the above,based on tax neutrality 
A) Country Z 
B) Country Y 
C) Country X 
D) none of the above,based on tax neutrality

Question 8

In the context of international taxation,the Bahamas,Lichtenstein,and Monaco are considered by the OEDC as:

Accepted Answer

A) tax holidays 
B) tax shelters 
C) tax havens 
D) tax centers 
A) tax holidays 
B) tax shelters 
C) tax havens 
D) tax centers

Question 9

What is the "Safe Harbor Rule?"

Accepted Answer

A) If a foreign tax rate is 90% or more of the U.S.corporate tax rate,no part of a controlled foreign corporation's income is considered Subpart F income. 
B) This is a guideline issued by the OEDC that encourages developed countries to open branches in underdeveloped countries. 
C) If a controlled foreign corporation's Subpart F income is less than 10% of its total income,it will not be taxed currently by the U.S.government. 
D) If a controlled foreign corporation's Subpart F income is less than 10% of its total income,it will not be taxed until dividends are received by the parent. 
A) If a foreign tax rate is 90% or more of the U.S.corporate tax rate,no part of a controlled foreign corporation's income is considered Subpart F income. 
B) This is a guideline issued by the OEDC that encourages developed countries to open branches in underdeveloped countries. 
C) If a controlled foreign corporation's Subpart F income is less than 10% of its total income,it will not be taxed currently by the U.S.government. 
D) If a controlled foreign corporation's Subpart F income is less than 10% of its total income,it will not be taxed until dividends are received by the parent.

Question 10

What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries?

Accepted Answer

A) Harmonization of accounting standards 
B) Competition for foreign investment 
C) Currencies pegged to another country's currency 
D) None of the above 
A) Harmonization of accounting standards 
B) Competition for foreign investment 
C) Currencies pegged to another country's currency 
D) None of the above

Question 11

What is the main advantage of the American Jobs Creation Act of 2004 over the Tax Reform Act of 1986 relative to FTC baskets.

Accepted Answer

A) A newer tax act is always more advantageous. 
B) It has much fewer baskets and,as a result,more chance that a company won't have excess unused FTC's. 
C) There is no advantage,as excess FTC's from one basket still can't be used to offset tax in another basket. 
D) The carryforward period for excess FTC's was extended. 
A) A newer tax act is always more advantageous. 
B) It has much fewer baskets and,as a result,more chance that a company won't have excess unused FTC's. 
C) There is no advantage,as excess FTC's from one basket still can't be used to offset tax in another basket. 
D) The carryforward period for excess FTC's was extended.

Question 12

Aco Ltd mined diamonds at a cost of FC 1,000,000 and sold them to Beako for FC 2,500,000. Beako distributed the diamonds to its customers and received FC 4,000,000. If the national VAT is 20%,how much tax did Beako pay?

Accepted Answer

A) FC 200,000 
B) FC 500,000 
C) FC 300,000 
D) FC 800,000 
A) FC 200,000 
B) FC 500,000 
C) FC 300,000 
D) FC 800,000

Question 13

The nine categories of foreign source income defined by the Tax Reform Act of 1986 are referred to as:

Accepted Answer

A) FTC rates 
B) FTC credits 
C) FTC baskets 
D) FTC brackets 
A) FTC rates 
B) FTC credits 
C) FTC baskets 
D) FTC brackets

Question 14

Use the following to answer questions :
A Japanese branch of a U.S.corporation paid $4,200,000 in taxes to the government of Japan on income it generated there. The corporation is subject to a 35% tax rate in the U.S.
-How much tax will be owed to the U.S.government on the Japanese branch income?

Accepted Answer

A) $4,200,000 
B) $3,500,000 
C) $0 
D) $7,000,000 
A) $4,200,000 
B) $3,500,000 
C) $0 
D) $7,000,000

Question 15

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 16

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 17

How might a parent company's home country eliminate double taxation on foreign source income?

Accepted Answer

A) tax credits for taxes paid to foreign countries 
B) tax deductions for taxes paid to foreign countries 
C) taking a territorial approach to taxing income 
D) all of the above 
A) tax credits for taxes paid to foreign countries 
B) tax deductions for taxes paid to foreign countries 
C) taking a territorial approach to taxing income 
D) all of the above

Question 18

What is the meaning of "tax system neutrality?"

Accepted Answer

A) Taxes should be minimized. 
B) Tax systems should not be a major factor in business decisions. 
C) Tax policies should be unbiased. 
D) Taxes in one jurisdiction are offset by tax credits in another jurisdiction. 
A) Taxes should be minimized. 
B) Tax systems should not be a major factor in business decisions. 
C) Tax policies should be unbiased. 
D) Taxes in one jurisdiction are offset by tax credits in another jurisdiction.

Question 19

What is another name for the worldwide approach of tax jurisdiction?

Accepted Answer

A) nationality approach 
B) global approach 
C) international approach 
D) boundary approach 
A) nationality approach 
B) global approach 
C) international approach 
D) boundary approach

Question 20

Under U.S.tax law,what is a "resident?"

Accepted Answer

A) a person living in the United States for 183 days or more per year 
B) a person holding a "green card" from the U.S.Immigration and Naturalization Service 
C) a corporation organized in the United States 
D) all of the above 
A) a person living in the United States for 183 days or more per year 
B) a person holding a "green card" from the U.S.Immigration and Naturalization Service 
C) a corporation organized in the United States 
D) all of the above

Under what condition may it be to the taxpayer's advantage to take a deduction for total foreign taxes paid rather than a tax credit for foreign income taxes?

Under U.S.tax laws,how are taxes paid by U.S.corporations to foreign governments treated?

What is the international norm for determining tax jurisdiction?

What is meant by the term "thin capitalization?"

The subsidiary of a U.S.corporation located in Country Y generated income of $1,000,000 on which it paid $200,000 in taxes to Country Y. The subsidiary paid a dividend to the U.S.parent of $150,000. How much tax is currently owed to the U.S.government if the federal tax rate is 35%?

The subsidiary of a U.S.corporation located in Country Y generated income of $1,000,000 on which it paid $400,000 (40%)in taxes to Country Y. The subsidiary paid a dividend to the U.S.parent of $54,000. How much tax is currently owed to the U.S.government if the federal tax rate is 35%?

Under the citizenship approach of tax jurisdiction,if Company A,incorporated in Country X,was based in Country Y and earned dividends in Country Z,the dividends would be ultimately taxed in which country?

In the context of international taxation,the Bahamas,Lichtenstein,and Monaco are considered by the OEDC as:

What is the "Safe Harbor Rule?"

What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries?

What is the main advantage of the American Jobs Creation Act of 2004 over the Tax Reform Act of 1986 relative to FTC baskets.

Aco Ltd mined diamonds at a cost of FC 1,000,000 and sold them to Beako for FC 2,500,000. Beako distributed the diamonds to its customers and received FC 4,000,000. If the national VAT is 20%,how much tax did Beako pay?

The nine categories of foreign source income defined by the Tax Reform Act of 1986 are referred to as:

Use the following to answer questions : A Japanese branch of a U.S.corporation paid $4,200,000 in taxes to the government of Japan on income it generated there. The corporation is subject to a 35% tax rate in the U.S. -How much tax will be owed to the U.S.government on the Japanese branch 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?

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

How might a parent company's home country eliminate double taxation on foreign source income?

What is the meaning of "tax system neutrality?"

What is another name for the worldwide approach of tax jurisdiction?

Under U.S.tax law,what is a "resident?"

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

Exam 11: International Taxation

Under what condition may it be to the taxpayer's advantage to take a deduction for total foreign taxes paid rather than a tax credit for foreign income taxes?

Under U.S.tax laws,how are taxes paid by U.S.corporations to foreign governments treated?

What is the international norm for determining tax jurisdiction?

What is meant by the term "thin capitalization?"

The subsidiary of a U.S.corporation located in Country Y generated income of $1,000,000 on which it paid $200,000 in taxes to Country Y. The subsidiary paid a dividend to the U.S.parent of $150,000. How much tax is currently owed to the U.S.government if the federal tax rate is 35%?

The subsidiary of a U.S.corporation located in Country Y generated income of $1,000,000 on which it paid $400,000 (40%)in taxes to Country Y. The subsidiary paid a dividend to the U.S.parent of $54,000. How much tax is currently owed to the U.S.government if the federal tax rate is 35%?

Under the citizenship approach of tax jurisdiction,if Company A,incorporated in Country X,was based in Country Y and earned dividends in Country Z,the dividends would be ultimately taxed in which country?

In the context of international taxation,the Bahamas,Lichtenstein,and Monaco are considered by the OEDC as:

What is the "Safe Harbor Rule?"

What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries?

What is the main advantage of the American Jobs Creation Act of 2004 over the Tax Reform Act of 1986 relative to FTC baskets.

Aco Ltd mined diamonds at a cost of FC 1,000,000 and sold them to Beako for FC 2,500,000. Beako distributed the diamonds to its customers and received FC 4,000,000. If the national VAT is 20%,how much tax did Beako pay?

The nine categories of foreign source income defined by the Tax Reform Act of 1986 are referred to as:

Use the following to answer questions : A Japanese branch of a U.S.corporation paid $4,200,000 in taxes to the government of Japan on income it generated there. The corporation is subject to a 35% tax rate in the U.S. -How much tax will be owed to the U.S.government on the Japanese branch 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?

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

How might a parent company's home country eliminate double taxation on foreign source income?

What is the meaning of "tax system neutrality?"

What is another name for the worldwide approach of tax jurisdiction?

Under U.S.tax law,what is a "resident?"

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