Exam 9: Taxation of International Transactions

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

Your client holds foreign tax credit (FTC)carryforwards,i.e. ,it is in an "excess credit" position.Give at least three planning ideas that the client should implement,so as to free up the suspended FTCs.

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

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Which of the following statements is false in regard to the U.S.income tax treaty program?

The § 367 cross-border transfer rules seem to counteract other favorable tax provisions that allow the taxpayer to defer gross income,e.g.§§ 351 and 368.What is the rationale for eliminating this deferral? Provide two examples of transactions to which § 367 would apply.

Goolsbee,Inc. ,a domestic corporation,generates U.S.-source and foreign-source gross income.Goolsbee's assets (tax book value)are as follows. Goolsbee incurs interest expense of $200,000.Using the asset method and the tax book value,apportion interest expense to foreign-source income.

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

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

Shannon,a foreign person with a green card,spends the following days in the United States. Shannon's residency status for 2014 is:

Which of the following income items does not represent Subpart F income if it is earned by a controlled foreign corporation in Fredonia? Purchase of inventory from the U.S.parent,followed by:

In allocating interest expense between U.S.and foreign sources,a taxpayer must use the tax basis of the income-producing assets.

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?

Describe and diagram the timeline that most businesses use to enter the international markets.

An advance pricing agreement (APA)is used between:

Which of the following situations requires the filing of an information return with the U.S.government?

In 2013,George renounces his U.S.citizenship and moves to Fredonia,where income tax rates are very low.George is a multimillionaire and says he "has had it" with high Federal income taxes on wealthy individuals like himself.In 2016,George's U.S.-source income is $1.5 million.That income escapes Federal income taxes.

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?

Ridge,Inc. ,a domestic corporation,reports worldwide taxable income of $800,000,including a $300,000 dividend from Emma,Inc. ,a foreign corporation.Ridge's U.S.tax liability before FTC is $280,000.Ridge owns 20% of Emma.Emma's E & P after taxes is $8 million and it has paid foreign taxes of $4 million attributable to that E & P.If Ridge elects the FTC,its U.S.gross income with regard to the dividend from Emma is:

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.