Exam 9: Taxation of International Transactions

USCo, a domestic corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld. Its worldwide taxable income is $1,500,000 and its U.S. tax liability before the foreign tax credit is $525,000. What is USCo's allowed foreign tax credit?

A U.S. corporation may be able to alleviate the problem of excess foreign taxes by:

USCo, a domestic corporation, has worldwide taxable income of $500,000, including a $100,000 dividend from ForCo, a wholly-owned foreign corporation. ForCo's post-1986 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)?

A non-U.S. individual's "green card" remains in effect until:

SunCo, a domestic corporation, owns a number of patents related to designing sunglasses. SunCo licenses these patents to unrelated parties. SpainCo, a Spanish corporation, paid SunCo $78,000 in royalties related to these licenses. SpainCo uses the patent information in its manufacturing process in its Texas plant. WiscCo, a domestic corporation, paid SunCo $32,000 in royalties related to the licenses. WiscCo uses the patent information in its manufacturing process in its German manufacturing plant. How much foreign-source royalty income did SunCo earn from these licenses?

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

Which of the following is not a U.S. person?

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

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Which of the following items of CFC income constitute foreign base company sales income?

An appropriate transfer price is one that considers the risks, assets, and functions of the persons to whom income is assigned.

Flan, 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. Flan's U.S. and foreign assets are as follows. How should Flan assign its interest expense between U.S. and foreign sources to maximize its FTC for the current year?

All of an NRA's U.S.-source income that is not effectively connected with a U.S. trade or business is subject to a flat U.S. income tax rate of 30%, unless the tax rate is modified by a treaty.

Copp, Inc., a domestic 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. Copp has been a CFC for the entire year and makes no distributions in the current year. Copp must include in gross income (before any § 78 gross-up):

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

Which of the following would not prevent an alien without a "green card" from being classified as a U.S. resident for income tax purposes?

ForCo, a foreign corporation, receives interest income of $100,000 from USCo, an unrelated domestic corporation. USCo has historically earned 85% of its income from foreign sources. What amount of ForCo's interest income is U.S. source?

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

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

USCo has foreign-source income from a manufacturing operation, from sales of the manufactured goods, and from stocks and bonds held for investment. How many categories or "baskets" of income does USCo have for foreign tax credit limitation purposes?