Question 1

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 2

Peanut,Inc. ,a domestic 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 3

U.S.income tax treaties:

Accepted Answer

A) Provide rules by which multinational taxpayers avoid double taxation. 
B) Provide for taxation exclusively by the source country. 
C) Provide that the country with the highest tax rate will be allowed exclusive tax collection. 
D) Provide for taxation exclusively by the country of residence. 
A) Provide rules by which multinational taxpayers avoid double taxation. 
B) Provide for taxation exclusively by the source country. 
C) Provide that the country with the highest tax rate will be allowed exclusive tax collection. 
D) Provide for taxation exclusively by the country of residence.

Question 4

A tax haven often is:

Accepted Answer

A) A country with high internal income taxes. 
B) A country with no or low internal income taxes. 
C) A country without income tax treaties. 
D) A country that prohibits "treaty shopping." 
A) A country with high internal income taxes. 
B) A country with no or low internal income taxes. 
C) A country without income tax treaties. 
D) A country that prohibits "treaty shopping."

Question 5

In which of the following independent situations would Slane,a foreign corporation,be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen,10% by Kathy,12% by Leslie,10% by David,8% by Ben,and 48% by Mike.

Accepted Answer

A) Jen,Kathy,Leslie,David,Ben,and Mike are all U.S.citizens. 
B) Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.David is married to Kathy.Mike is a foreign resident and citizen. 
C) Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.Ben is Mike's son.Mike is a foreign resident and citizen. 
D) Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.Mike is a foreign resident and citizen. 
A) Jen,Kathy,Leslie,David,Ben,and Mike are all U.S.citizens. 
B) Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.David is married to Kathy.Mike is a foreign resident and citizen. 
C) Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.Ben is Mike's son.Mike is a foreign resident and citizen. 
D) Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.Mike is a foreign resident and citizen.

Question 6

Krebs,Inc. ,a U.S.corporation,operates an unincorporated branch manufacturing operation in the U.K.Krebs,Inc. ,reports $900,000 of taxable income from the U.K.branch on its U.S.tax return,along with $1,600,000 of taxable income from its U.S.operations.The U.K.branch income is all general limitation basket income.Krebs paid $270,000 in U.K.income taxes related to the $900,000 in branch income.Assuming a U.S.tax rate of 35%,what is Krebs' U.S.tax liability after any allowable foreign tax credits?

Accepted Answer

A) $0. 
B) $270,000. 
C) $605,000. 
D) $875,000. 
A) $0. 
B) $270,000. 
C) $605,000. 
D) $875,000.

Question 7

Amber,Inc. ,a domestic corporation receives a $150,000 cash dividend from Starke,Ltd.Amber owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $1 million attributable to that E & P.What is Amber's foreign tax credit related to the Starke dividend?

Accepted Answer

A) $200,000. 
B) $150,000. 
C) $100,000. 
D) $75,000. 
A) $200,000. 
B) $150,000. 
C) $100,000. 
D) $75,000.

Question 8

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.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.

Accepted Answer

BrazilCo's U.S.tax l

Question 9

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

Accepted Answer

A) Purchase of inventory from unrelated party and sale outside the CFC country. 
B) Purchase of inventory from a related party and sale outside the CFC country. 
C) Services performed for the U.S.parent in a country in which the CFC was organized. 
D) Services performed on behalf of an unrelated party in a country outside the country in which the CFC was organized. 
E) None of the above transactions. 
A) Purchase of inventory from unrelated party and sale outside the CFC country. 
B) Purchase of inventory from a related party and sale outside the CFC country. 
C) Services performed for the U.S.parent in a country in which the CFC was organized. 
D) Services performed on behalf of an unrelated party in a country outside the country in which the CFC was organized. 
E) None of the above transactions.

Question 10

Serena,a nonresident alien,is employed by GlobalCo,a foreign corporation.Serena works in the United States for 3 days during the year,receiving a gross salary of $2,500 for this period.GlobalCo is not engaged in a U.S.trade or business.Under the "commercial traveler" exception,the $2,500 is not classified as U.S.-source income.

Accepted Answer

A) True 
 B)False

Question 11

A U.S.taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect)paid or accrued.

Accepted Answer

A) True 
 B)False

Question 12

The U.S.system for taxing income earned inside its borders by non-U.S.persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

Accepted Answer

A) True 
 B)False

Question 13

Arendt,Inc. ,a domestic corporation,purchases a piece of equipment for use in its manufacture of custom pianos.The equipment is acquired in Ireland at a cost of 200,000 euros when 1 euro: $1.35.Payment is due in 90 days.Arendt acquires 200,000 euros and pays for the machine when 1 euro: $1.15.What is the basis of the asset to Arendt and what is the foreign currency exchange gain or loss,if any?

Accepted Answer

No foreign currency exchange gain or los

Question 14

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

Accepted Answer

A) Foreign persons are potentially subject to U.S.withholding tax on U.S.-source investment income. 
B) Foreign individuals may be subject to U.S.income tax but foreign corporations are never subject to U.S.income tax. 
C) Foreign persons are only subject to U.S.income or withholding tax if engaged in a U.S.trade or business. 
D) Foreign 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) Foreign persons are potentially subject to U.S.withholding tax on U.S.-source investment income. 
B) Foreign individuals may be subject to U.S.income tax but foreign corporations are never subject to U.S.income tax. 
C) Foreign persons are only subject to U.S.income or withholding tax if engaged in a U.S.trade or business. 
D) Foreign 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 15

Freda was born and continues to live in Uruguay.She exports widgets to U.S.customers.The U.S.does not have in force an income tax treaty with Urugauy.Freda's net U.S.income from the widgets is subject to a flat 30% Federal income tax rate.

Accepted Answer

A) True 
 B)False

Question 16

The following persons own Schlecht Corporation,a foreign corporation.   None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

Accepted Answer

A) Schlecht is not a CFC. 
B) Chee includes $90,000 in gross income. 
C) Marina is not a U.S.shareholder. 
D) Marina includes $24,000 in gross income. 
E) None of the above statements is correct. 
A) Schlecht is not a CFC. 
B) Chee includes $90,000 in gross income. 
C) Marina is not a U.S.shareholder. 
D) Marina includes $24,000 in gross income. 
E) None of the above statements is correct.

Question 17

Kilps,a U.S.corporation,receives a $200,000 dividend from a 20% owned foreign corporation.The deemed-paid taxes attributable to this dividend are $40,000 and foreign taxes withheld on remittance of the dividend are $30,000.Kilps's U.S.tax liability before the FTC is $350,000,the gross dividend income is $240,000,and Kilps's worldwide taxable income is $1 million.Kilps's foreign tax credit for the taxable year is:

Accepted Answer

A) $84,000. 
B) $70,000. 
C) $40,000. 
D) $30,000. 
A) $84,000. 
B) $70,000. 
C) $40,000. 
D) $30,000.

Question 18

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?

Accepted Answer

A) $0. 
B) $300,000. 
C) $3 million. 
D) $5 million. 
A) $0. 
B) $300,000. 
C) $3 million. 
D) $5 million.

Question 19

Lang,an NRA who was not a resident of a treaty country,receives taxable dividends of $50,000 from U.S.corporations.Lang does not conduct a U.S.trade or business.Lang's dividends are taxed by the United States through withholding by the payor of:

Accepted Answer

A) 0%. 
B) 15%. 
C) 30%. 
D) 35%. 
A) 0%. 
B) 15%. 
C) 30%. 
D) 35%.

Question 20

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the Euro as its functional currency.

Accepted Answer

A) True 
 B)False

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?

Peanut,Inc. ,a domestic 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?

U.S.income tax treaties:

A tax haven often is:

In which of the following independent situations would Slane,a foreign corporation,be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen,10% by Kathy,12% by Leslie,10% by David,8% by Ben,and 48% by Mike.

Amber,Inc. ,a domestic corporation receives a $150,000 cash dividend from Starke,Ltd.Amber owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $1 million attributable to that E & P.What is Amber's foreign tax credit related to the Starke dividend?

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

A U.S.taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect)paid or accrued.

The U.S.system for taxing income earned inside its borders by non-U.S.persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

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

Freda was born and continues to live in Uruguay.She exports widgets to U.S.customers.The U.S.does not have in force an income tax treaty with Urugauy.Freda's net U.S.income from the widgets is subject to a flat 30% Federal income tax rate.

The following persons own Schlecht Corporation,a foreign corporation. None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

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?

Lang,an NRA who was not a resident of a treaty country,receives taxable dividends of $50,000 from U.S.corporations.Lang does not conduct a U.S.trade or business.Lang's dividends are taxed by the United States through withholding by the payor of:

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the Euro as its functional currency.

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

Peanut,Inc. ,a domestic 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?

U.S.income tax treaties:

A tax haven often is:

In which of the following independent situations would Slane,a foreign corporation,be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen,10% by Kathy,12% by Leslie,10% by David,8% by Ben,and 48% by Mike.

Amber,Inc. ,a domestic corporation receives a $150,000 cash dividend from Starke,Ltd.Amber owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $1 million attributable to that E & P.What is Amber's foreign tax credit related to the Starke dividend?

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

A U.S.taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect)paid or accrued.

The U.S.system for taxing income earned inside its borders by non-U.S.persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

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

Freda was born and continues to live in Uruguay.She exports widgets to U.S.customers.The U.S.does not have in force an income tax treaty with Urugauy.Freda's net U.S.income from the widgets is subject to a flat 30% Federal income tax rate.

The following persons own Schlecht Corporation,a foreign corporation. None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

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?

Lang,an NRA who was not a resident of a treaty country,receives taxable dividends of $50,000 from U.S.corporations.Lang does not conduct a U.S.trade or business.Lang's dividends are taxed by the United States through withholding by the payor of:

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the Euro as its functional currency.

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