Exam 9: Taxation of International Transactions

ForCo, a foreign corporation, receives interest income of $50,000 from USCo, an unrelated domestic corporation. USCo has historically earned 79% of its gross income from active foreign-source business income. What amount of ForCo's interest income is U.S.-source?

Given the following information, determine whether Greta, an alien, is a U.S. resident for 2012. Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Match the definition with the correct term.

Old, Inc., a U.S. corporation, earns foreign-source income classified in two different limitation baskets in the current year. It earns $20,000 in passive income and suffers a net loss of $45,000 in the general limitation basket. What is the numerator of the FTC limitation formula for the passive basket in the current year?

Steve, Inc., a U.S. shareholder owns 100% of a CFC from which Steve receives a $3 million cash distribution. The CFC's E & P is composed of the following amounts. Steve recognizes a taxable dividend of:

Which of the following statements regarding translation of foreign taxes is true?

Which of the following statements concerning the sourcing of income from inventory produced by the taxpayer in the U.S. and sold outside the U.S. is true?

OutCo, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year. OutCo's current year E & P is $250,000 and its accumulated E & P is $18 million. What is the current year Subpart F deemed dividend to USCo?

Which of the following income items does not represent Subpart F income if earned by a CFC? Purchase of inventory from a U.S. parent and sale to:

ForCo, a foreign corporation not engaged in a U.S. trade or business, recognizes a $3 million gain from the sale of land located in the United States. The amount realized on the sale was $50 million. Absent any exceptions, what is the required withholding amount on the part of the purchaser of this land?

KeenCo, a domestic corporation, is the sole shareholder of LovettCo, a controlled foreign corporation. LovettCo has $250,000 in E & P attributable to income not previously taxed to KeenCo and $200,000 E & P attributable to income taxed to the U.S. shareholder as Subpart F income. LovettCo makes a $125,000 dividend distribution to KeenCo. Ignoring any deemed paid credit implications, what is the U.S. gross income to KeenCo resulting from this dividend?

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

RainCo, a domestic corporation, owns a number of patents related to designing umbrellas. RainCo licenses these patents to unrelated parties. TexCo, a domestic corporation, paid RainCo $100,000 in royalties related to these licenses. TexCo uses the patent information in its manufacturing process in its Canadian plant. IrishCo, an Irish corporation, paid RainCo $25,000 in royalties related to the licenses. IrishCo uses the patent information in its manufacturing process in its Michigan manufacturing plant. How much foreign-source royalty income did RainCo earn from these licenses?

An advance pricing agreement (APA) is used between:

Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and foreign corporations are subject to taxation under FIRPTA.

In which of the following independent situations would a foreign corporation be classified as a controlled foreign corporation?

A "U.S. shareholder" for purposes of CFC classification is any U.S. person who owns directly, indirectly, or constructively at least 10% of the voting power or value of a foreign corporation.

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

Which of the following transactions, if entered into by an NRA, is not subject to U.S. taxation?

Which of the following determinations requires knowing the amount of one's foreign-source gross income?