Question 1

Which of the following statements regarding income sourcing is correct?

Accepted Answer

A) Everything else being equal,a larger foreign-source income decreases the foreign tax credit limitation for U.S.persons. 
B) Everything else being equal,a larger foreign-source income increases the foreign tax credit limitation for U.S.persons. 
C) Everything else being equal,a larger U.S.-source income increases the foreign tax credit limitation for U.S.persons. 
D) Everything else being equal,changing foreign-source income does not change the foreign tax credit limitation for U.S.persons. 
A) Everything else being equal,a larger foreign-source income decreases the foreign tax credit limitation for U.S.persons. 
B) Everything else being equal,a larger foreign-source income increases the foreign tax credit limitation for U.S.persons. 
C) Everything else being equal,a larger U.S.-source income increases the foreign tax credit limitation for U.S.persons. 
D) Everything else being equal,changing foreign-source income does not change the foreign tax credit limitation for U.S.persons.

Question 2

Kunst,a U.S.corporation,generates $100,000 of foreign-source income in the general income basket and $40,000 of foreign-source income in the passive income basket.Kunst's worldwide taxable income is $1,200,000,and its U.S.tax liability before FTC is $420,000.Foreign taxes attributable to the general income basket are $60,000 and to the passive income are $4,000.What is Kunst's foreign tax credit for the tax year?

Accepted Answer

A) $64,000 
B) $39,000 
C) $35,000 
D) $4,000 
A) $64,000 
B) $39,000 
C) $35,000 
D) $4,000

Question 3

Dividends received from Murdock Corp. ,a corporation organized in Sustenato that earns 70% of its income from U.S.business activities,are 70% U.S.-source income.

Accepted Answer

A) True 
 B)False

Question 4

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
-Income of foreign person taxed through filing of a U.S.tax return with deductions allowed against gross income.

Accepted Answer

The answer of Match the definition with the correct term.
a.Expatriate
b.Resident
c.Nonresident...

Question 5

Which of the following determinations does not require knowing the amounts of one's U.S.- versus foreign-source income?

Accepted Answer

A) Calculation of a U.S.person's total taxable income. 
B) Calculation of U.S.withholding tax on the FDAP income of foreign persons. 
C) Calculation of the foreign earned income exclusion. 
D) Calculation of a foreign person's income effectively connected with carrying on a U.S.trade or business. 
A) Calculation of a U.S.person's total taxable income. 
B) Calculation of U.S.withholding tax on the FDAP income of foreign persons. 
C) Calculation of the foreign earned income exclusion. 
D) Calculation of a foreign person's income effectively connected with carrying on a U.S.trade or business.

Question 6

Given the following information,determine if FanCo,a foreign corporation,is a CFC. Shareholders of Voting foreign corporation power Classification Murray 24% U.S.person Nancy 20% U.S.person Otto 40% Foreign person Patricia 16% U.S.person Patricia is Murray's daughter.

Accepted Answer

​
 Voting power
 Voting power
 Total
 Sh

Question 7

A controlled foreign corporation (CFC) realizes Subpart F income from:

Accepted Answer

A) Purchase of inventory from unrelated U.S.person and sale outside the CFC country. 
B) Purchase of inventory from a related U.S.person and sale outside the CFC country. 
C) Services performed for the U.S.parent in a country in which the CFC was organized. 
D) Services performed on behalf of an unrelated party in a country outside the country in which the CFC was organized. 
A) Purchase of inventory from unrelated U.S.person and sale outside the CFC country. 
B) Purchase of inventory from a related U.S.person and sale outside the CFC country. 
C) Services performed for the U.S.parent in a country in which the CFC was organized. 
D) Services performed on behalf of an unrelated party in a country outside the country in which the CFC was organized.

Question 8

Wellington,Inc. ,a U.S.corporation,owns 30% of a CFC that has $50 million of earnings and profits for the current year.Included in that amount is $20 million of Subpart F income.Wellington has been a CFC for the entire year and makes no distributions in the current year.Wellington must include in gross income (before any § 78 gross-up):

Accepted Answer

A) $0. 
B) $6 million. 
C) $20 million. 
D) $50 million. 
A) $0. 
B) $6 million. 
C) $20 million. 
D) $50 million.

Question 9

The transfer of the assets of a U.S.corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Accepted Answer

A) True 
 B)False

Question 10

Arendt,Inc. ,a U.S.corporation,purchases a piece of equipment for use in its manufacture of custom pianos.The equipment is acquired in Ireland at a cost of 200,000 euros when 1 euro: $1.35.Payment is due in 90 days.Arendt acquires 200,000 euros and pays for the machine when 1 euro: $1.15.What is the basis of the asset to Arendt and what is the foreign currency exchange gain or loss,if any?

Accepted Answer

No foreign currency exchange gain or los

Question 11

GoldCo,a U.S.corporation,incorporates its foreign branch in a § 351 exchange,creating GreenCo,a wholly owned foreign corporation.GoldCo transfers $200 in inventory (basis = $50) and $900 in land (basis = $950) to GreenCo.GreenCo uses these assets in carrying on a trade or business outside the U.S.What gain or loss,if any,does GoldCo recognize as a result of this transaction?

Accepted Answer

A) ($50) 
B) $0 
C) $100 
D) $150 
A) ($50) 
B) $0 
C) $100 
D) $150

Question 12

Which of the following statements regarding the sourcing of gross income is true?

Accepted Answer

A) Non-U.S.persons not engaged in a U.S.trade or business are indifferent as to whether any of their income is U.S.source. 
B) All income earned by non-U.S.persons not engaged in a U.S.trade or business is treated as foreign source. 
C) U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S.trade or business. 
D) Certain U.S.-source investment income earned by non-U.S.persons not engaged in a U.S.trade or business may be subject to a U.S.withholding tax. 
A) Non-U.S.persons not engaged in a U.S.trade or business are indifferent as to whether any of their income is U.S.source. 
B) All income earned by non-U.S.persons not engaged in a U.S.trade or business is treated as foreign source. 
C) U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S.trade or business. 
D) Certain U.S.-source investment income earned by non-U.S.persons not engaged in a U.S.trade or business may be subject to a U.S.withholding tax.

Question 13

Nico lives in California.She was born in Peru but holds a green card.Nico is a nonresident alien (NRA).

Accepted Answer

A) True 
 B)False

Question 14

Dark,Inc. ,a U.S.corporation,operates Dunkel,an unincorporated branch manufacturing operation in Germany.Dark reports $100,000 of taxable income from Dunkel on its U.S.tax return,along with $400,000 of taxable income from its U.S.operations.Dark paid $40,000 in German income taxes related to the $100,000 of Dunkel income.Assuming a U.S.tax rate of 35%,what is Dark's U.S.tax liability after any allowable foreign tax credits?

Accepted Answer

A) $35,000 
B) $135,000 
C) $140,000 
D) $175,000 
A) $35,000 
B) $135,000 
C) $140,000 
D) $175,000

Question 15

Discuss the primary purposes of income tax treaties.

Accepted Answer

The primary purpose of an income tax tre

Question 16

In international corporate income taxation,what are the uses of the "sourcing rules" in computing Federal taxable income?

Accepted Answer

The sourcing of income and deductions in

Question 17

USCo,a U.S.corporation,reports worldwide taxable income of $500,000,including a $100,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's undistributed earnings and profits are $1 million and it has paid $200,000 of foreign income taxes attributable to these earnings.What is USCo's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?

Accepted Answer

A) $500,000 
B) $200,000 
C) $100,000 
D) $20,000 
A) $500,000 
B) $200,000 
C) $100,000 
D) $20,000

Question 18

The following income of a foreign corporation is not subject to the regular U.S.corporate income tax rates.

Accepted Answer

A) FIRPTA gains. 
B) Capital gains effectively connected with a U.S.trade or business. 
C) Net long-term capital gains,where no U.S.trade or business exists. 
D) Fixed,determinable,annual or periodic (FDAP) income effectively connected with a U.S.trade or business. 
A) FIRPTA gains. 
B) Capital gains effectively connected with a U.S.trade or business. 
C) Net long-term capital gains,where no U.S.trade or business exists. 
D) Fixed,determinable,annual or periodic (FDAP) income effectively connected with a U.S.trade or business.

Question 19

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Accepted Answer

A) True 
 B)False

Question 20

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
-A deemed paid foreign tax credit is included in gross income.

Accepted Answer

The answer of Match the definition with the correct term....

Exam 25: Taxation of International Transactions

Which of the following statements regarding income sourcing is correct?

Dividends received from Murdock Corp. ,a corporation organized in Sustenato that earns 70% of its income from U.S.business activities,are 70% U.S.-source income.

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 -Income of foreign person taxed through filing of a U.S.tax return with deductions allowed against gross income.

Which of the following determinations does not require knowing the amounts of one's U.S.- versus foreign-source income?

Given the following information,determine if FanCo,a foreign corporation,is a CFC. Shareholders of Voting foreign corporation power Classification Murray 24% U.S.person Nancy 20% U.S.person Otto 40% Foreign person Patricia 16% U.S.person Patricia is Murray's daughter.

A controlled foreign corporation (CFC) realizes Subpart F income from:

The transfer of the assets of a U.S.corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Which of the following statements regarding the sourcing of gross income is true?

Nico lives in California.She was born in Peru but holds a green card.Nico is a nonresident alien (NRA).

Discuss the primary purposes of income tax treaties.

In international corporate income taxation,what are the uses of the "sourcing rules" in computing Federal taxable income?

The following income of a foreign corporation is not subject to the regular U.S.corporate income tax rates.

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

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 -A deemed paid foreign tax credit is included in gross income.

An Introduction to Taxation and Understanding the Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxabl

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

Filters