Exam 25: Taxation of International Transactions

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:

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

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.

In year 1,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 year 4,George's U.S.-source income is $1.5 million.That income escapes Federal income taxes.

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

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.

With respect to income generated by non-U.S.persons,does the U.S.apply a "worldwide" or a "territorial" approach.Be specific.

Match the definition with the correct term. a.Expatriate b.Resident c.Nonresident alien d.U.S. trade or business e.Branch profits tax f.Effectively connected income -A non-U.S.citizen who holds a "green card."

Which of the following statements regarding the taxation of U.S.real property gains recognized by non-U.S.persons not engaged in a U.S.trade or business is false? Gains from the disposition of U.S.real property are:

Given the following information,determine if FanCo,a foreign corporation,is a CFC. Patricia is Murray's daughter.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Foreign base company income b.Foreign personal holding company income c.Controlled foreign corporation d.U.S. shareholder e.Previously taxed income f.More than 10 percent g.More than 50 percent h.More than 80 percent -Upon repatriation to a CFC,it does not create dividend income.

ForCo,a non-U.S.corporation based in Aldonza,purchases widgets from USCo,Inc.,its U.S.parent corporation.The widgets are sold by ForCo to an unrelated foreign corporation in Aldonza.The income from sale of the widgets by ForCo is Subpart F foreign base company sales income.

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

GlobalCo,a foreign corporation not engaged in a U.S.trade or business,receives $80,000 in interest income from deposits with the foreign branch of a U.S.bank.The U.S.bank earns 24% of its income from foreign sources.How much of GlobalCo's interest income is U.S.source?

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Foreign base company income b.Foreign personal holding company income c.Controlled foreign corporation d.U.S. shareholder e.Previously taxed income f.More than 10 percent g.More than 50 percent h.More than 80 percent -Portfolio income treated as Subpart F income.

Liang,an NRA,is sent to the United States by Fuller Corporation,her foreign employer.She spends 50 days in the United States and earns $20,000 for a two-month period.This amount is attributable to 40 U.S.working days and 10 non-U.S.working days.Her employer does not have a U.S.trade or business and Liang spends no other time in the U.S.for the tax year.Liang's U.S.-source taxable income is:

USCo,a U.S.corporation,receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld.Its worldwide taxable income is $1,500,000 and its U.S.tax liability before the foreign tax credit is $525,000.What is USCo's allowed foreign tax credit?

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 -Number of foreign tax credit limitation baskets.

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

Chipper,Inc.,a U.S.corporation,reports worldwide taxable income of $1 million,including a $300,000 dividend from Emma,Inc.,a foreign corporation.Chipper's U.S.tax liability before FTC is $340,000.Chipper owns 20% of Emma.Emma's E & P after taxes is $8 million and it has paid foreign taxes of $2 million attributable to that E & P.If Chipper elects the FTC,its U.S.gross income with regard to the dividend from Emma is: