Question 1

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.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements regarding a non-U.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 non-U.S. person is engaged in a U.S. trade or business, the non-U.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 non-U.S. person is engaged in a U.S. trade or business, the non-U.S. person's worldwide income is subject to U.S. taxation.

Question 3

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
a.Indirect credit
b.Direct credit
c.One
d.Two
e.Ten
f.Twenty
g.Gross-up (§ 78)
h.​Overall foreign loss
-Maximum years for a foreign tax credit carryforward.

Accepted Answer

The answer of Match the definition with the correct term....

Question 4

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 5

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 6

Quest is organized and operates in the U.K.Its U.S.effectively connected earnings for the taxable year are $900,000 and its net U.S.equity has increased by $40,000.Quest's dividend equivalent amount for the tax year is $860,000.

Accepted Answer

A) True 
 B)False

Question 7

Subpart F income includes portfolio income like dividends and interest.

Accepted Answer

A) True 
 B)False

Question 8

Julio,a nonresident alien,realizes a gain on the sale of commercial real estate located in Omaha.The real estate was sold to Mariana,Julio's cousin who is also a nonresident alien.Julio recognizes foreign-source income from the sale because his home country is not the U.S.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a foreign person?

Accepted Answer

A) Foreign corporation 51% owned by U.S. shareholders. 
B) Foreign corporation 100% owned by a domestic corporation. 
C) Citizen of Germany with U.S. permanent resident status (i.e., green card). 
D) Citizen of Italy who spends 14 days vacationing in the United States. 
A) Foreign corporation 51% owned by U.S. shareholders. 
B) Foreign corporation 100% owned by a domestic corporation. 
C) Citizen of Germany with U.S. permanent resident status (i.e., green card). 
D) Citizen of Italy who spends 14 days vacationing in the United States.

Question 10

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 11

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 12

Which of the following is a special tax regime imposed on certain foreign persons engaged in a U.S.trade or business?

Accepted Answer

A) Nondiscrimination tax. 
B) Windfall U.S. profits tax. 
C) Dividend repatriation tax. 
D) Branch profits tax. 
A) Nondiscrimination tax. 
B) Windfall U.S. profits tax. 
C) Dividend repatriation tax. 
D) Branch profits tax.

Question 13

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 14

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

Question 15

Carol,a citizen and resident of Adagio,reports gross income that is effectively connected with a U.S.business.No deductions are allowed against this income,and Carol's U.S.tax rate is a flat 30 percent.

Accepted Answer

A) True 
 B)False

Question 16

USCo,a U.S.corporation,reports worldwide taxable income of $1,500,000,including a $300,000 dividend from ForCo,a wholly-owned 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

LocalCo merges into HeirCo,a non-U.S.entity,in a transaction that would qualify as a "Type A" reorganization.The resulting realized gain is tax-deferred under U.S.income tax law,using §§ 351 and 368.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
a.Indirect credit
b.Direct credit
c.One
d.Two
e.Ten
f.Twenty
g.Gross-up (§ 78)
h.​Overall foreign loss
-Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Accepted Answer

The answer of Match the definition with the correct term....

Question 20

In working with the foreign tax credit,a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Accepted Answer

A) Deducting the excess foreign taxes that do not qualify for the credit. 
B) Repatriating more foreign income to the United States in the year there is an excess limitation. 
C) Generating "same basket" foreign-source income that is subject to a tax rate higher than the U.S. tax rate. 
D) Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S. tax rate. 
A) Deducting the excess foreign taxes that do not qualify for the credit. 
B) Repatriating more foreign income to the United States in the year there is an excess limitation. 
C) Generating "same basket" foreign-source income that is subject to a tax rate higher than the U.S. tax rate. 
D) Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S. tax rate.

Exam 25: Taxation of International Transactions

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.

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

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Indirect credit b.Direct credit c.One d.Two e.Ten f.Twenty g.Gross-up (§ 78) h.​Overall foreign loss -Maximum years for a foreign tax credit carryforward.

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?

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?

Quest is organized and operates in the U.K.Its U.S.effectively connected earnings for the taxable year are $900,000 and its net U.S.equity has increased by $40,000.Quest's dividend equivalent amount for the tax year is $860,000.

Subpart F income includes portfolio income like dividends and interest.

Julio,a nonresident alien,realizes a gain on the sale of commercial real estate located in Omaha.The real estate was sold to Mariana,Julio's cousin who is also a nonresident alien.Julio recognizes foreign-source income from the sale because his home country is not the U.S.

Which of the following is not a foreign person?

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

Which of the following is a special tax regime imposed on certain foreign persons engaged in a U.S.trade or business?

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

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

Carol,a citizen and resident of Adagio,reports gross income that is effectively connected with a U.S.business.No deductions are allowed against this income,and Carol's U.S.tax rate is a flat 30 percent.

LocalCo merges into HeirCo,a non-U.S.entity,in a transaction that would qualify as a "Type A" reorganization.The resulting realized gain is tax-deferred under U.S.income tax law,using §§ 351 and 368.

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.

In working with the foreign tax credit,a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Indirect credit b.Direct credit c.One d.Two e.Ten f.Twenty g.Gross-up (§ 78) h.Overall foreign loss -Maximum years for a foreign tax credit carryforward.