Exam 9: Taxation of International Transactions

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -Method for assigning deductions to correct source.

Which of the following transactions by a U.S.corporation may result in taxation under § 367.

Monika,a nonresident alien,is employed by GlobalCo,a foreign corporation.Monika works in the United States for 32 days during the year,receiving a gross salary of $2,900 for this period.GlobalCo is not engaged in a U.S.trade or business.Under the "commercial traveler" exception,the $2,900 is not classified as U.S.-source income.

GreenCo,a domestic corporation,earns $25 million of taxable income from U.S.sources and $5 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -A portion of a business that accounts for profits and losses using its functional currency.

If in 2006 the taxpayer has a foreign loss of $30,000 in the general limitation category,foreign-source income of $100,000 in the high withholding interest limitation category and $200,000 in the passive limitation category basket,the numerators for the FTC limitation baskets are:

Generally,accrued foreign taxes are:

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -Foreign tax credit allowed for withholding taxes on payments from foreign sources.

BrazilCo,Inc.,a foreign corporation with a U.S.trade or business,has U.S.-source income as follows. Determine BrazilCo's total U.S.tax liability for the year assuming a 35% corporate rate and no tax treaty.Assume BrazilCo leaves its U.S.branch profits invested in the United States and does not otherwise repatriate any of its U.S.assets during the year.

Section 482 is used to:

Performance,Inc.,a U.S.corporation,owns 100% of Krumb,Ltd.,a foreign corporation.Krumb earns only general limitation income.During the current year,Krumb paid Performance a $200,000 dividend.The § 902 credit associated with this dividend is $30,000.The foreign jurisdiction requires a withholding tax of 30%,so Performance received only $140,000 in cash as a result of the dividend.What is Performance's total U.S.gross income reported as a result of the $140,000 cash dividend received?

The following persons own Good Corporation,a foreign corporation. None of the shareholders are related.Subpart F income for the tax year is $200,000.No distributions are made.Which of the following statements is correct?

A foreign corporation,not resident in a treaty country,has a U.S.branch that earns effectively connected E & P of $4 million for the tax year and increases its investments in U.S.property (its U.S.net equity)by $1,600,000.It pays a U.S.corporate income tax of $2,153,846.Its branch profits tax is:

Match the definition with the correct term. a.Foreign base company income b.Foreign personal holding company income c.U.S. shareholder d.Previously taxed income e.De minimis rule f.Passive foreign investment company -Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

The source of income received for the use of intangible property is the country in which the owner of the property producing the income is resident.

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -A net loss in all foreign tax credit limitation baskets.

All losses are apportioned against U.S.-source income.

Twelve unrelated U.S.persons own a foreign corporation equally.The foreign corporation is a CFC.

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

Peanut,Inc.,a domestic corporation,receives $500,000 of foreign-source interest income on which foreign taxes of $5,000 are withheld.Its worldwide taxable income is $900,000,and U.S.tax liability before FTC is $315,000.What is Peanut's FTC?