Exam 25: Taxation of International Transactions

The § 367 cross-border transfer rules seem to counteract other favorable tax provisions that allow the taxpayer to defer gross income, e.g.§§ 351 and 368.What is the rationale for eliminating this deferral? Provide two examples of transactions to which § 367 would apply.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Indirect credit b.Direct credit c.One d.Two e.Ten f.Twenty g.Gross-up (§ 78) h.Overall foreign loss -Maximum years for a foreign tax credit carryforward.

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

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

Without the foreign tax credit,double taxation would result when:

Generally,accrued foreign income taxes are translated at the:

Section 482 is used by the Treasury to:

Columbia,Inc. ,a U.S.corporation,receives a $150,000 cash dividend from Starke,Ltd.Columbia owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P.What is Columbia's foreign tax credit related to the Starke dividend?

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

The following persons own Schlecht Corporation,a foreign corporation. Jim,U.S.individual 35% Gina,U.S.individual 15% Marina,U.S.individual 8% Pedro,U.S.individual 12% Chee,non-U.S.individual 30% ​ None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

The IRS can use § 482 reallocations to assure that transactions between related parties are properly reflected in a tax return.

Which of the following statements is false in regard to the U.S.income tax treaty program?

Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

Match the definition with the correct term. a.Expatriate b.Resident c.Nonresident alien d.U.S. trade or business e.Branch profits tax f.Effectively connected income -An individual who gives up U.S.citizenship to avoid U.S.income taxes.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Foreign base company income b.Foreign personal holding company income c.Controlled foreign corporation d.U.S. shareholder e.Previously taxed income f.More than 10 percent g.More than 50 percent h.More than 80 percent -A CFC's profits from sales of goods and services.

Qwan,a U.S.corporation,reports $250,000 interest expense for the tax year.None of the interest relates to nonrecourse debt or loans from affiliated corporations.Qwan's U.S.and foreign assets are reported as follows. Fair market value- U.S.assets $ 5,000,000 Foreign assets $10,000,000 Tax book value- U.S.assets $ 2,000,000 Foreign assets $ 6,000,000 ​ How should Qwan assign its interest expense between U.S.and foreign sources to maximize its FTC for the current year?

Britta,Inc. ,a U.S.corporation,reports foreign-source income and pays foreign taxes as follows. Income Taxes Passive category $200,000 $ 10,000 General limitation category 800,000 350,000 Britta's worldwide taxable income is $1,600,000 and U.S.taxes before FTC are $560,000 (assume a 35% tax rate).What is Britta's U.S.tax liability after the FTC?

Chipper,Inc. ,a U.S.corporation,reports worldwide taxable income of $1 million,including a $300,000 dividend from Emma,Inc. ,a foreign corporation.Chipper's U.S.tax liability before FTC is $340,000.Chipper owns 20% of Emma.Emma's E & P after taxes is $8 million and it has paid foreign taxes of $2 million attributable to that E & P.If Chipper elects the FTC,its U.S.gross income with regard to the dividend from Emma is:

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Indirect credit b.Direct credit c.One d.Two e.Ten f.Twenty g.Gross-up (§ 78) h.Overall foreign loss -Number of foreign tax credit limitation baskets.

GreenCo,a U.S.corporation,earns $25 million of taxable income from U.S.sources and $10 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?