Exam 9: Taxation of International Transactions

Britta,Inc. ,a U.S.corporation,reports foreign-source income and pays foreign taxes as follows. Britta's worldwide taxable income is $1,600,000 and U.S.taxes before FTC are $560,000 (assume a 35% tax rate).What is Britta's U.S.tax liability after the FTC?

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

A U.S.business conducts international communications activities between the U.S.and Spain.The resulting income is sourced 100% to the U.S. ,the residence of the taxpayer.

The transfer of the assets of a U.S.corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Present,Inc. ,a domestic corporation,owns 60% of the stock of Past,Inc. ,a foreign corporation.For the current year,Present receives a dividend of $80,000 from Past.Past's pools of E & P (after taxes)and foreign taxes are $4,000,000 and $500,000,respectively.What is Present's total gross income from this dividend if it elects to claim the FTC for deemed-paid foreign taxes?

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

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

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

SunCo,a domestic 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?