Question 1

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Accepted Answer

A) They allow for a deferral of non-U.S.-source income from U.S. taxation. 
B) They provide certainty as to the U.S. income tax treatment of cross-border transactions. 
C) They prevent shifting of income from the U.S. to high-tax non-U.S. jurisdictions. 
D) They prevent shifting of income from the U.S. to low-tax non-U.S. jurisdictions. 
A) They allow for a deferral of non-U.S.-source income from U.S. taxation. 
B) They provide certainty as to the U.S. income tax treatment of cross-border transactions. 
C) They prevent shifting of income from the U.S. to high-tax non-U.S. jurisdictions. 
D) They prevent shifting of income from the U.S. to low-tax non-U.S. jurisdictions.

Question 2

Which of the following statements regarding the translation of foreign income taxes is true?

Accepted Answer

A) Translation of foreign taxes into U.S. dollars helps manage the U.S. balance of trade. 
B) Foreign taxes are translated into U.S. dollars only when such translation provides a tax benefit to the taxpayer. 
C) Foreign taxes typically are paid in a foreign currency and, thus, must be converted to U.S. dollars when used as a FTC on a U.S. return. 
D) Translation of foreign taxes into U.S. dollars encourages foreign corporations to set up operations in the United States. 
A) Translation of foreign taxes into U.S. dollars helps manage the U.S. balance of trade. 
B) Foreign taxes are translated into U.S. dollars only when such translation provides a tax benefit to the taxpayer. 
C) Foreign taxes typically are paid in a foreign currency and, thus, must be converted to U.S. dollars when used as a FTC on a U.S. return. 
D) Translation of foreign taxes into U.S. dollars encourages foreign corporations to set up operations in the United States.

Question 3

Freiburg,Ltd.,a foreign corporation,operates a U.S.branch that reports effectively connected U.S.earnings and profits (after income taxes) of $900,000 for the tax year.The branch's U.S.net equity at the beginning of the tax year is $3.5 million and at the end of the tax year is $2 million.Freiburg is organized in a nontreaty country.Compute Freiburg's branch profits tax for the year.

Accepted Answer

The branch profits tax is equal to 30% o

Question 4

Kipp,a U.S.shareholder under the CFC provisions,owns 40% of a CFC.If the CFC's Subpart F income for the taxable year is $200,000,Kipp is taxed on receipt of a constructive dividend of $80,000.

Accepted Answer

A) True 
 B)False

Question 5

Luisa,a non-U.S.person with a green card,spends the following days in the United States.
Luisa's residency status for Year 3 is:

Accepted Answer

A) U.S. resident because she has a green card. 
B) U.S. resident since she was a U.S. resident for the past immediately preceding two years. 
C) Not a U.S. resident because Luisa was not in the United states for more than 30 days during Year 3. 
D) Not a U.S. resident since, using the three-year test, Luisa is not present in the United States for at least 183 days. 
A) U.S. resident because she has a green card. 
B) U.S. resident since she was a U.S. resident for the past immediately preceding two years. 
C) Not a U.S. resident because Luisa was not in the United states for more than 30 days during Year 3. 
D) Not a U.S. resident since, using the three-year test, Luisa is not present in the United States for at least 183 days.

Question 6

Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

Accepted Answer

A) Non-U.S. persons never are subject to U.S. income tax. 
B) Non-U.S. persons are subject to U.S. income tax only on gains from U.S. real property. 
C) Non-U.S. persons can be subject to a withholding tax on U.S.-source portfolio income. 
D) Non-U.S. persons can be subject to a withholding tax on foreign-source portfolio income. 
A) Non-U.S. persons never are subject to U.S. income tax. 
B) Non-U.S. persons are subject to U.S. income tax only on gains from U.S. real property. 
C) Non-U.S. persons can be subject to a withholding tax on U.S.-source portfolio income. 
D) Non-U.S. persons can be subject to a withholding tax on foreign-source portfolio income.

Question 7

Waltz,Inc.,a U.S.taxpayer,pays foreign taxes of $50,000 on foreign-source general basket income of $90,000.Waltz's worldwide taxable income is $450,000,on which it owes U.S.taxes of $157,500 before FTC.Waltz's FTC is $50,000.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Arendt,Inc.,a U.S.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€: $1.25.Payment is due in 90 days.Arendt acquires 200,000 euros and pays for the machine when 1€: $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 10

Match the definition with the correct term.
a.Inbound
b.Outbound
c.Allocation and apportionment
d.Qualified business unit
e.Tax haven
f.Income tax treaty
g.Section 482
-Method for sourcing income and deductions.

Accepted Answer

The answer of Match the definition with the correct term.
a.Inbound
b.Outbound
c.Allocation...

Question 11

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
-An individual who gives up U.S.citizenship to avoid U.S.income taxes.

Accepted Answer

The answer of Match the definition with the correct term.
a.Expatriate
b.Resident
c.Nonresident...

Question 12

During Year 4,Josita,an NRA,receives interest income of $50,000 from Talmadge,Inc.,an unrelated U.S.corporation.Considering the following facts related to Talmadge's operations,what is the source of the interest income received by Josita?

Accepted Answer

Talmadge meets the 80% active foreign bu

Question 13

GreenCo,a U.S.corporation,earns $25 million of taxable income from U.S.sources and $10 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Accepted Answer

A) $25 million. 
B) $35 million. 
C) $25 million less any tax paid on the foreign income. 
D) $35 million less any tax paid on U.S. income. 
A) $25 million. 
B) $35 million. 
C) $25 million less any tax paid on the foreign income. 
D) $35 million less any tax paid on U.S. income.

Question 14

Mitch,an NRA,sells a building in Omaha for $1 million.His basis in the building is zero for both regular tax and AMT purposes.Mitch has no other contact with the U.S.other than the ownership of the building.How much Federal income tax is due from Mitch on the sale?

Accepted Answer

A) $0, as Mitch is an NRA. 
B) The amount realized times the top individual tax rate. 
C) The net gain times the top capital gains tax rate. 
D) The net gain taxed at the lesser of the applicable regular or AMT rates. 
A) $0, as Mitch is an NRA. 
B) The amount realized times the top individual tax rate. 
C) The net gain times the top capital gains tax rate. 
D) The net gain taxed at the lesser of the applicable regular or AMT rates.

Question 15

Discuss the primary purposes of income tax treaties.

Accepted Answer

The primary purpose of an income tax tre

Question 16

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
-A CFC's profits from sales of goods and services.

Accepted Answer

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

Question 17

SilverCo,a U.S.corporation,incorporates its foreign branch in a § 351 exchange,creating GreenCo,a wholly owned foreign corporation.SilverCo transfers $200 in Yen (basis = $150) and $900 in land (basis = $925) to GreenCo.GreenCo uses these assets in carrying on a trade or business outside the United States.What gain or loss,if any,is recognized as a result of this transaction?

Accepted Answer

A) ($25) 
B) $0 
C) $25 
D) $50 
A) ($25) 
B) $0 
C) $25 
D) $50

Question 18

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 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
-Ownership percentage required before a deemed paid foreign tax credit is allowed.

Accepted Answer

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

Question 20

Zhang,an NRA who is not a resident of a treaty country,receives taxable dividends of $50,000 from U.S.corporations.Zhang does not conduct a U.S.trade or business.Zhang's dividends are subject to withholding by the payor of:

Accepted Answer

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

Exam 25: Taxation of International Transactions

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Which of the following statements regarding the translation of foreign income taxes is true?

Kipp,a U.S.shareholder under the CFC provisions,owns 40% of a CFC.If the CFC's Subpart F income for the taxable year is $200,000,Kipp is taxed on receipt of a constructive dividend of $80,000.

Luisa,a non-U.S.person with a green card,spends the following days in the United States. Luisa's residency status for Year 3 is:

Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

Waltz,Inc.,a U.S.taxpayer,pays foreign taxes of $50,000 on foreign-source general basket income of $90,000.Waltz's worldwide taxable income is $450,000,on which it owes U.S.taxes of $157,500 before FTC.Waltz's FTC is $50,000.

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

Match the definition with the correct term. a.Inbound b.Outbound c.Allocation and apportionment d.Qualified business unit e.Tax haven f.Income tax treaty g.Section 482 -Method for sourcing income and deductions.

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 -An individual who gives up U.S.citizenship to avoid U.S.income taxes.

During Year 4,Josita,an NRA,receives interest income of $50,000 from Talmadge,Inc.,an unrelated U.S.corporation.Considering the following facts related to Talmadge's operations,what is the source of the interest income received by Josita?

GreenCo,a U.S.corporation,earns $25 million of taxable income from U.S.sources and $10 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Mitch,an NRA,sells a building in Omaha for $1 million.His basis in the building is zero for both regular tax and AMT purposes.Mitch has no other contact with the U.S.other than the ownership of the building.How much Federal income tax is due from Mitch on the sale?

Discuss the primary purposes of income tax treaties.

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.

Zhang,an NRA who is not a resident of a treaty country,receives taxable dividends of $50,000 from U.S.corporations.Zhang does not conduct a U.S.trade or business.Zhang's dividends are subject to withholding by the payor of:

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

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