Question 1

Which of the following statements regarding income sourcing is not correct?

Accepted Answer

A)  U.S. persons benefit from earning low-tax foreign-source income. 
B)  Foreign persons generally benefit from avoiding U.S.-source income classification. 
C)  U.S. persons are not concerned with source of income because all their income is subject to U.S. tax under a worldwide system. 
D)  Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States. 
A)  U.S. persons benefit from earning low-tax foreign-source income. 
B)  Foreign persons generally benefit from avoiding U.S.-source income classification. 
C)  U.S. persons are not concerned with source of income because all their income is subject to U.S. tax under a worldwide system. 
D)  Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States.

Question 2

Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

Accepted Answer

The answer of Owner of shares counted in determining whether...

Question 3

RainCo, a U.S. 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 U.S.-source royalty income did RainCo earn from these licenses?

Accepted Answer

A)  $0 
B)  $25,000 
C)  $100,000 
D)  $125,000 
A)  $0 
B)  $25,000 
C)  $100,000 
D)  $125,000

Question 4

USCo, a U.S. corporation, purchases inventory from distributors within the U.S. and resells this inventory to customers outside the U.S., with title passing outside the U.S. Profit on the sale is $10,000. What is the source of the USCo's inventory sales income?

Accepted Answer

A)  $5,000 U.S. source and $5,000 foreign source. 
B)  $5,000 U.S. source and $5,000 sourced based on location of the pertinent manufacturing assets. 
C)  $10,000 U.S. source. 
D)  $10,000 foreign source. 
A)  $5,000 U.S. source and $5,000 foreign source. 
B)  $5,000 U.S. source and $5,000 sourced based on location of the pertinent manufacturing assets. 
C)  $10,000 U.S. source. 
D)  $10,000 foreign source.

Question 5

USCo, a U.S. corporation, reports worldwide taxable income of $500,000, including a $100,000 dividend from ForCo, a wholly­owned 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 6

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

Accepted Answer

The answer of A deemed paid foreign tax credit is...

Question 7

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

Accepted Answer

A) True 
 B)False

Question 8

SunCo, a U.S. 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 Germany manufacturing plant. How much U.S.-source royalty income did SunCo earn from these licenses?

Accepted Answer

A)  $0 
B)  $32,000 
C)  $78,000 
D)  $110,000 
A)  $0 
B)  $32,000 
C)  $78,000 
D)  $110,000

Question 9

ForCo, a subsidiary of a U.S. corporation incorporated in Belgium, manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany. The income from the sale of widgets is not Subpart F foreign base company sales income.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements best describes the purpose of § 482, under which the Treasury can reallocate income and deductions among related taxpayers?

Accepted Answer

A)  To provide tax benefits to U.S. multinationals that export U.S. produced property. 
B)  To allow the IRS to select the best method for determining transfer prices for U.S. taxpayers. 
C)  To alleviate double taxation problems generated by related entities doing business in two or more countries. 
D)  To place a controlled entity on a tax parity with an uncontrolled entity with regard to prices charged by the entities. 
A)  To provide tax benefits to U.S. multinationals that export U.S. produced property. 
B)  To allow the IRS to select the best method for determining transfer prices for U.S. taxpayers. 
C)  To alleviate double taxation problems generated by related entities doing business in two or more countries. 
D)  To place a controlled entity on a tax parity with an uncontrolled entity with regard to prices charged by the entities.

Question 11

The IRS can use § 482 reallocations to assure that transactions between related parties are properly reflected in a tax return.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  Dividends are sourced based on the residence of the recipient. 
B)  Dividends from non-U.S. corporations are always foreign source. 
C)  Dividends from non-U.S. corporations are foreign-source only to the extent that 80% or more of the non-U.S. corporation's gross income for the 3 years preceding the year of the dividend payment was effectively connected with the conduct of a non-U.S. trade or business. 
D)  A percentage of dividends from non-U.S. corporations are U.S. source to the extent that 25% or more of the non­U.S. corporation's gross income for the 3 years preceding the year of the dividend payment was effectively connected with the conduct of a U.S. trade or business. 
A)  Dividends are sourced based on the residence of the recipient. 
B)  Dividends from non-U.S. corporations are always foreign source. 
C)  Dividends from non-U.S. corporations are foreign-source only to the extent that 80% or more of the non-U.S. corporation's gross income for the 3 years preceding the year of the dividend payment was effectively connected with the conduct of a non-U.S. trade or business. 
D)  A percentage of dividends from non-U.S. corporations are U.S. source to the extent that 25% or more of the non­U.S. corporation's gross income for the 3 years preceding the year of the dividend payment was effectively connected with the conduct of a U.S. trade or business.

Question 13

Xenia, Inc., a U.S. shareholder, owns 100% of Fredonia, a CFC. Xenia receives a $3 million cash distribution from Fredonia. Fredonia's E & P is composed of the following amounts. -$500,000 attributable to previously taxed increases in investment in U.S. property.
-$1,500,000 attributable to previously taxed Subpart F income.
-$4,800,000 attributable to other E & P. Xenia recognizes a taxable dividend of:

Accepted Answer

A)  $3 million. 
B)  $2.5 million. 
C)  $1.5 million. 
D)  $1 million. 
E)  $0. 
A)  $3 million. 
B)  $2.5 million. 
C)  $1.5 million. 
D)  $1 million. 
E)  $0.

Question 14

Waltz, Inc., a U.S. taxpayer, pays foreign taxes of $50,000 on foreign-source general basket income of $90,000. Waltz's worldwide taxable income is $450,000, on which it owes U.S. taxes of $157,500 before FTC. Waltz's FTC is $50,000.

Accepted Answer

A) True 
 B)False

Question 15

Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

Accepted Answer

g
Match the definition with the correct

Question 16

A domestic corporation is one whose assets are primarily located in the U.S. For this purpose, the primarily located test (>50%) applies.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Which of the following statements regarding a non­U.S. person's U.S. tax consequences is true?

Accepted Answer

A)  Non-U.S. persons are potentially subject to U.S. withholding tax on U.S.-source investment income. 
B)  Non-U.S. individuals may be subject to U.S. income tax but non-U.S. corporations are never subject to U.S. income tax. 
C)  Non-U.S. persons are only subject to U.S. income or withholding tax if engaged in a U.S. trade or business. 
D)  Non-U.S. persons must be physically present in the United States before any U.S.-source income is subject to U.S. income or withholding tax. 
A)  Non-U.S. persons are potentially subject to U.S. withholding tax on U.S.-source investment income. 
B)  Non-U.S. individuals may be subject to U.S. income tax but non-U.S. corporations are never subject to U.S. income tax. 
C)  Non-U.S. persons are only subject to U.S. income or withholding tax if engaged in a U.S. trade or business. 
D)  Non-U.S. persons must be physically present in the United States before any U.S.-source income is subject to U.S. income or withholding tax.

Question 19

Freiburg, Ltd., a foreign corporation, operates a U.S. branch that reports effectively connected U.S. earnings and profits (after income taxes) of $900,000 for the tax year. The branch's U.S. net equity at the beginning of the tax year is $3.5 million and at the end of the tax year is $2 million. Freiburg is organized in a nontreaty country. Compute Freiburg's branch profits tax for the year.

Accepted Answer

The branch profits tax is equal to 30% o

Question 20

Which of the following statements regarding a non­U.S. person's U.S. tax consequences is true?

Accepted Answer

A)  Non-U.S. persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S. trade or business. 
B)  Non-U.S. persons are subject to U.S. income or withholding tax only if they are engaged in a U.S. trade or business. 
C)  Non-U.S. persons are not taxed on gains from U.S. real property as long as such property is not used in a U.S. trade or business. 
D)  Once a non­U.S. person is engaged in a U.S. trade or business, the non­U.S. person's worldwide income is subject to U.S. taxation. 
A)  Non-U.S. persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S. trade or business. 
B)  Non-U.S. persons are subject to U.S. income or withholding tax only if they are engaged in a U.S. trade or business. 
C)  Non-U.S. persons are not taxed on gains from U.S. real property as long as such property is not used in a U.S. trade or business. 
D)  Once a non­U.S. person is engaged in a U.S. trade or business, the non­U.S. person's worldwide income is subject to U.S. taxation.

Which of the following statements regarding income sourcing is not correct?

Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

USCo, a U.S. corporation, purchases inventory from distributors within the U.S. and resells this inventory to customers outside the U.S., with title passing outside the U.S. Profit on the sale is $10,000. What is the source of the USCo's inventory sales income?

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

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

ForCo, a subsidiary of a U.S. corporation incorporated in Belgium, manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany. The income from the sale of widgets is not Subpart F foreign base company sales income.

Which of the following statements best describes the purpose of § 482, under which the Treasury can reallocate income and deductions among related taxpayers?

The IRS can use § 482 reallocations to assure that transactions between related parties are properly reflected in a tax return.

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

Waltz, Inc., a U.S. taxpayer, pays foreign taxes of $50,000 on foreign-source general basket income of $90,000. Waltz's worldwide taxable income is $450,000, on which it owes U.S. taxes of $157,500 before FTC. Waltz's FTC is $50,000.

Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

A domestic corporation is one whose assets are primarily located in the U.S. For this purpose, the primarily located test (>50%) applies.

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

Which of the following statements regarding a nonU.S. person's U.S. tax consequences is true?

Which of the following statements regarding a nonU.S. person's U.S. tax consequences 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

Which of the following statements regarding income sourcing is not correct?

Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

USCo, a U.S. corporation, purchases inventory from distributors within the U.S. and resells this inventory to customers outside the U.S., with title passing outside the U.S. Profit on the sale is $10,000. What is the source of the USCo's inventory sales income?

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

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

ForCo, a subsidiary of a U.S. corporation incorporated in Belgium, manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany. The income from the sale of widgets is not Subpart F foreign base company sales income.

Which of the following statements best describes the purpose of § 482, under which the Treasury can reallocate income and deductions among related taxpayers?

The IRS can use § 482 reallocations to assure that transactions between related parties are properly reflected in a tax return.

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

Waltz, Inc., a U.S. taxpayer, pays foreign taxes of $50,000 on foreign-source general basket income of $90,000. Waltz's worldwide taxable income is $450,000, on which it owes U.S. taxes of $157,500 before FTC. Waltz's FTC is $50,000.

Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

A domestic corporation is one whose assets are primarily located in the U.S. For this purpose, the primarily located test (>50%) applies.

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

Which of the following statements regarding a non­U.S. person's U.S. tax consequences is true?

Which of the following statements regarding a non­U.S. person's U.S. tax consequences 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

Which of the following statements regarding a nonU.S. person's U.S. tax consequences is true?

Which of the following statements regarding a nonU.S. person's U.S. tax consequences is true?