Question 1

U.S. taxpayers earning income outside the United States.

Accepted Answer

The answer of U.S. taxpayers earning income outside the United...

Question 2

The U.S. system for taxing income earned outside its borders by U.S. persons is referred to as the territorial approach, because only income earned within the U.S. border is subject to taxation.

Accepted Answer

A) True 
 B)False

Question 3

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?

Accepted Answer

A)  The individual was prevented from leaving the United States due to an illness which arose while in the United States. 
B)  The individual commutes daily from Mexico to the United States to work. 
C)  The individual is a foreign consul assigned to the United States. 
D)  The individual was in the United States to oversee her investments. 
A)  The individual was prevented from leaving the United States due to an illness which arose while in the United States. 
B)  The individual commutes daily from Mexico to the United States to work. 
C)  The individual is a foreign consul assigned to the United States. 
D)  The individual was in the United States to oversee her investments.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Individual who is not a U.S. citizen or resident.

Accepted Answer

The answer of Individual who is not a U.S. citizen...

Question 6

PlantCo is a company based in Adagio. PlantCo uses a formula to manufacture pharmaceuticals. The formula was developed and is owned by DrugCo, a U.S. entity. Royalties paid by PlantCo to DrugCo for the use of the formula are U.S.-source income.

Accepted Answer

A) True 
 B)False

Question 7

Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf's broker in Oslo. How is this gain treated for U.S. tax purposes?

Accepted Answer

A)  It is foreign-source income subject to U.S. taxation. 
B)  It is foreign-source income not subject to U.S. taxation. 
C)  It is U.S.-source income subject to U.S. taxation. 
D)  It is U.S.-source income exempt from U.S. taxation. 
A)  It is foreign-source income subject to U.S. taxation. 
B)  It is foreign-source income not subject to U.S. taxation. 
C)  It is U.S.-source income subject to U.S. taxation. 
D)  It is U.S.-source income exempt from U.S. taxation.

Question 8

Bighley shows the following results for the year. Bighley offsets the general-basket loss against U.S.-source income for the current tax year.
U.S.-source income $5 million
Foreign-source income, general FTC basket ($2 million)
Foreign-source income, passive FTC basket $3 million

Accepted Answer

A) True 
 B)False

Question 9

Twenty unrelated U.S. persons equally own all of the stock of Quigley, a foreign corporation. Quigley is a CFC.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  Domestic corporation. 
B)  Citizen of Turkey with U.S. permanent residence status (i.e., green card). 
C)  U.S. corporation 100% owned by a foreign corporation. 
D)  Foreign corporation 100% owned by a domestic corporation. 
A)  Domestic corporation. 
B)  Citizen of Turkey with U.S. permanent residence status (i.e., green card). 
C)  U.S. corporation 100% owned by a foreign corporation. 
D)  Foreign corporation 100% owned by a domestic corporation.

Question 11

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

Accepted Answer

A)  The United States taxes the U.S.-source income of a U.S. resident. 
B)  A foreign country taxes the foreign-source income of a nonresident alien. 
C)  The United States and a foreign country both tax the foreign-source income of a U.S. resident. 
D)  Terms of a tax treaty assign income taxing rights to the U.S. 
A)  The United States taxes the U.S.-source income of a U.S. resident. 
B)  A foreign country taxes the foreign-source income of a nonresident alien. 
C)  The United States and a foreign country both tax the foreign-source income of a U.S. resident. 
D)  Terms of a tax treaty assign income taxing rights to the U.S.

Question 12

When a business taxpayer "goes international," the first step usually is to create an overseas branch sales office.

Accepted Answer

A) True 
 B)False

Question 13

Peanut, Inc., a U.S. corporation, receives $500,000 of foreign-source interest income, on which foreign taxes of $5,000 are withheld. Peanut's worldwide taxable income is $900,000, and its U.S. Federal income tax liability before FTC is $270,000. What is Peanut's foreign tax credit?

Accepted Answer

A)  $500,000 
B)  $275,000 
C)  $150,000 
D)  $5,000 
A)  $500,000 
B)  $275,000 
C)  $150,000 
D)  $5,000

Question 14

Performance, Inc., a U.S. corporation, owns 100% of Krumb, Ltd., a foreign corporation. Krumb earns only general basket income. During the current year, Krumb paid Performance a $200,000 dividend. The foreign tax 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 received?

Accepted Answer

A)  $30,000 
B)  $140,000 
C)  $200,000 
D)  $230,000 
A)  $30,000 
B)  $140,000 
C)  $200,000 
D)  $230,000

Question 15

A net loss in all foreign tax credit limitation baskets.

Accepted Answer

The answer of A net loss in all foreign tax...

Question 16

USCo, a U.S. corporation, reports worldwide taxable income of $1,500,000, including a $300,000 dividend from ForCo, a wholly­owned foreign corporation. ForCo's undistributed earnings and profits are $15 million and it has paid $10 million 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)  $200,000 
B)  $300,000 
C)  $10 million 
D)  $15 million 
A)  $200,000 
B)  $300,000 
C)  $10 million 
D)  $15 million

Question 17

Olde Town, Inc., a U.S. corporation, earns $100,000 in passive foreign-source income and suffers a net loss of $60,000 in the general basket. What is the numerator of Olde Town's FTC limitation formula for the passive basket in the current year?

Accepted Answer

A)  $0 
B)  $40,000 
C)  $60,000 
D)  $100,000 
A)  $0 
B)  $40,000 
C)  $60,000 
D)  $100,000

Question 18

Maxim, Inc., a U.S. corporation, reports worldwide taxable income of $8 million, including a $900,000 dividend from ForCo, a wholly­owned foreign corporation. ForCo's undistributed E & P are $15 million and it has paid $6 million of foreign income taxes attributable to these earnings. What is Maxim's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?

Accepted Answer

A)  $0 
B)  $360,000 
C)  $900,000 
D)  $6 million 
A)  $0 
B)  $360,000 
C)  $900,000 
D)  $6 million

Question 19

Which of the following statements regarding the taxation of U.S. real property gains recognized by non-U.S. persons not engaged in a U.S. trade or business is false? Gains from the disposition of U.S. real property are:

Accepted Answer

A)  Not taxed to non-U.S. persons because real property gains are specifically exempt from U.S. taxation. 
B)  Taxed to non-U.S. persons without regard to whether such non-U.S. persons are engaged in a U.S. trade or business. 
C)  Taxed in the U.S. because such gains are treated as if they are effectively connected to a U.S. trade or business. 
D)  Taxed to non-U.S. persons notwithstanding the general exemption of capital gains from U.S. taxation. 
A)  Not taxed to non-U.S. persons because real property gains are specifically exempt from U.S. taxation. 
B)  Taxed to non-U.S. persons without regard to whether such non-U.S. persons are engaged in a U.S. trade or business. 
C)  Taxed in the U.S. because such gains are treated as if they are effectively connected to a U.S. trade or business. 
D)  Taxed to non-U.S. persons notwithstanding the general exemption of capital gains from U.S. taxation.

Question 20

Which of the following statements regarding foreign persons not engaged in a U.S. trade or business is true?

Accepted Answer

A)  Foreign persons are subject to potential withholding taxes on the gross amount of U.S.-source investment income. 
B)  Foreign persons with any U.S.-source income are taxed on net investment income (after expenses). 
C)  Foreign persons are not subject to U.S. tax if not engaged in a U.S. trade or business. 
D)  Foreign persons with only U.S.-source investment income are exempt from U.S. tax. 
A)  Foreign persons are subject to potential withholding taxes on the gross amount of U.S.-source investment income. 
B)  Foreign persons with any U.S.-source income are taxed on net investment income (after expenses). 
C)  Foreign persons are not subject to U.S. tax if not engaged in a U.S. trade or business. 
D)  Foreign persons with only U.S.-source investment income are exempt from U.S. tax.

U.S. taxpayers earning income outside the United States.

The U.S. system for taxing income earned outside its borders by U.S. persons is referred to as the territorial approach, because only income earned within the U.S. border is subject to taxation.

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?

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

Individual who is not a U.S. citizen or resident.

PlantCo is a company based in Adagio. PlantCo uses a formula to manufacture pharmaceuticals. The formula was developed and is owned by DrugCo, a U.S. entity. Royalties paid by PlantCo to DrugCo for the use of the formula are U.S.-source income.

Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf's broker in Oslo. How is this gain treated for U.S. tax purposes?

Bighley shows the following results for the year. Bighley offsets the general-basket loss against U.S.-source income for the current tax year. U.S.-source income $5 million Foreign-source income, general FTC basket ($2 million) Foreign-source income, passive FTC basket $3 million

Twenty unrelated U.S. persons equally own all of the stock of Quigley, a foreign corporation. Quigley is a CFC.

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

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

When a business taxpayer "goes international," the first step usually is to create an overseas branch sales office.

Peanut, Inc., a U.S. corporation, receives $500,000 of foreign-source interest income, on which foreign taxes of $5,000 are withheld. Peanut's worldwide taxable income is $900,000, and its U.S. Federal income tax liability before FTC is $270,000. What is Peanut's foreign tax credit?

A net loss in all foreign tax credit limitation baskets.

Olde Town, Inc., a U.S. corporation, earns $100,000 in passive foreign-source income and suffers a net loss of $60,000 in the general basket. What is the numerator of Olde Town's FTC limitation formula for the passive basket in the current year?

Which of the following statements regarding the taxation of U.S. real property gains recognized by non-U.S. persons not engaged in a U.S. trade or business is false? Gains from the disposition of U.S. real property are:

Which of the following statements regarding foreign persons not engaged in a U.S. trade or business is true?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 9: Taxation of International Transactions

U.S. taxpayers earning income outside the United States.

The U.S. system for taxing income earned outside its borders by U.S. persons is referred to as the territorial approach, because only income earned within the U.S. border is subject to taxation.

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?

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

Individual who is not a U.S. citizen or resident.

PlantCo is a company based in Adagio. PlantCo uses a formula to manufacture pharmaceuticals. The formula was developed and is owned by DrugCo, a U.S. entity. Royalties paid by PlantCo to DrugCo for the use of the formula are U.S.-source income.

Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf's broker in Oslo. How is this gain treated for U.S. tax purposes?

Bighley shows the following results for the year. Bighley offsets the general-basket loss against U.S.-source income for the current tax year. U.S.-source income $5 million Foreign-source income, general FTC basket ($2 million) Foreign-source income, passive FTC basket $3 million

Twenty unrelated U.S. persons equally own all of the stock of Quigley, a foreign corporation. Quigley is a CFC.

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

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

When a business taxpayer "goes international," the first step usually is to create an overseas branch sales office.

Peanut, Inc., a U.S. corporation, receives $500,000 of foreign-source interest income, on which foreign taxes of $5,000 are withheld. Peanut's worldwide taxable income is $900,000, and its U.S. Federal income tax liability before FTC is $270,000. What is Peanut's foreign tax credit?

A net loss in all foreign tax credit limitation baskets.

Olde Town, Inc., a U.S. corporation, earns $100,000 in passive foreign-source income and suffers a net loss of $60,000 in the general basket. What is the numerator of Olde Town's FTC limitation formula for the passive basket in the current year?

Which of the following statements regarding the taxation of U.S. real property gains recognized by non-U.S. persons not engaged in a U.S. trade or business is false? Gains from the disposition of U.S. real property are:

Which of the following statements regarding foreign persons not engaged in a U.S. trade or business is true?

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters