Question 1

Which of the following is true concerning tax harmonization in the European Union?

Accepted Answer

A)  The EU has harmonized rates and categories in the value-added tax. 
B)  The EU requires the use of the split rate form of tax system. 
C)  Tax rates have been coming down in the EU. 
D)  Although tax rates have not been harmonized, taxes bases and tax systems have been. 
A)  The EU has harmonized rates and categories in the value-added tax. 
B)  The EU requires the use of the split rate form of tax system. 
C)  Tax rates have been coming down in the EU. 
D)  Although tax rates have not been harmonized, taxes bases and tax systems have been. C

Question 2

A tax have is a place where foreign investors pay a minimum of tax to their home country.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following accurately describes how the U.S. taxes foreign branch earnings.

Accepted Answer

A)  Earnings that have been distributed to the home office are taxable, but earnings that are retained in the foreign location are not. 
B)  Neither earnings distributed to the home office nor earnings retained in the foreign location are taxed in the U.S. due to the tax credit. 
C)  Earnings distributed to the home office are translated at the exchange rate in effect on the date of the transfer. 
D)  Profits not distributed as earnings are translated at the year-end exchange rate. 
A)  Earnings that have been distributed to the home office are taxable, but earnings that are retained in the foreign location are not. 
B)  Neither earnings distributed to the home office nor earnings retained in the foreign location are taxed in the U.S. due to the tax credit. 
C)  Earnings distributed to the home office are translated at the exchange rate in effect on the date of the transfer. 
D)  Profits not distributed as earnings are translated at the year-end exchange rate. C

Question 4

The taxation of both domestic and foreign source income is known as

Accepted Answer

A)  double taxation. 
B)  the worldwide approach. 
C)  effective vs. statutory. 
D)  a tax incentive. 
A)  double taxation. 
B)  the worldwide approach. 
C)  effective vs. statutory. 
D)  a tax incentive.

Question 5

Except for certain CFC cases, U.S. parent does not declare income from a foreign corporation for tax purposes until it actually receives a dividend.

Accepted Answer

A) True 
 B)False

Question 6

According to changes in the U.S. tax laws related to transfer pricing,

Accepted Answer

A)  the level of complexity and documentation has been lowered significantly. 
B)  companies will have less flexibility in determining transfer pricing practices. 
C)  companies have to gather a lot of information from the third-party marketplace to justify their transfer pricing practices. 
D)  the IRS is not concerned with analyzing which transfer pricing method is the best method. 
A)  the level of complexity and documentation has been lowered significantly. 
B)  companies will have less flexibility in determining transfer pricing practices. 
C)  companies have to gather a lot of information from the third-party marketplace to justify their transfer pricing practices. 
D)  the IRS is not concerned with analyzing which transfer pricing method is the best method.

Question 7

In the U.S. tax law, an excess credit (if the foreign tax rate exceeds the U.S. tax rate)
I.can be carried back and applied against foreign source income of prior years
II.carried forward to be applied against foreign source income in future years

Accepted Answer

A)  I 
B)  II 
C)  either I or II 
D)  neither I or II 
A)  I 
B)  II 
C)  either I or II 
D)  neither I or II

Question 8

Assume that a U.S. company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withholding tax rate on dividends is 5 percent. If the subsidiary declares a 100% dividend, what is the amount of its direct and deemed direct tax credit?

Accepted Answer

A)  $40,000 
B)  $ 3,000 
C)  $43,000 
D)  $34,000 
A)  $40,000 
B)  $ 3,000 
C)  $43,000 
D)  $34,000

Question 9

In the US, for foreign corporations that are not CFC

Accepted Answer

A)  the deferral of income applies when it is foreign-based company shipping income 
B)  income is not taxable to the U.S parent corporation until a dividend is declared 
C)  the deferral of income includes bribes paid in foreign countries 
D)  requires that income be earned from the sale or purchase of goods produced inside the country where a tax haven corporation is located. 
A)  the deferral of income applies when it is foreign-based company shipping income 
B)  income is not taxable to the U.S parent corporation until a dividend is declared 
C)  the deferral of income includes bribes paid in foreign countries 
D)  requires that income be earned from the sale or purchase of goods produced inside the country where a tax haven corporation is located.

Question 10

The concept where the tax effect should not have an impact on business decisions is

Accepted Answer

A)  double taxation. 
B)  a tax incentive. 
C)  equity. 
D)  neutrality. 
A)  double taxation. 
B)  a tax incentive. 
C)  equity. 
D)  neutrality.

Question 11

Assume that a U.S. company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withholding tax rate on dividends is 5 percent. If the subsidiary declares a 100% dividend, how much of its income is included in U.S. taxable income?

Accepted Answer

A)  $100,000 
B)  $ 60,000 
C)  $ 39,600 
D)  nothing. 
A)  $100,000 
B)  $ 60,000 
C)  $ 39,600 
D)  nothing.

Question 12

The value added tax is a (an)

Accepted Answer

A)  corporate income tax. 
B)  withholding tax. 
C)  indirect tax. 
D)  tax credit. 
A)  corporate income tax. 
B)  withholding tax. 
C)  indirect tax. 
D)  tax credit.

Question 13

According to the Foreign Sales Corporation Act,

Accepted Answer

A)  the Domestic International Sales Corporation (DS
C)  is no longer permitted. 
B)  FSCs must be owned by foreign corporations to get the tax break. 
C)  all FSC income is exempted from U.S. tax. 
D)  the FSC must be incorporated in a foreign country or U.S. possession. 
A)  the Domestic International Sales Corporation (DS
C)  is no longer permitted. 
B)  FSCs must be owned by foreign corporations to get the tax break. 
C)  all FSC income is exempted from U.S. tax. 
D)  the FSC must be incorporated in a foreign country or U.S. possession.

Question 14

Assume that a U.S. company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withholding tax rate on dividends is 5 percent. If the subsidiary does not declare a dividend, how much of its income is included in U.S. taxable income?

Accepted Answer

A)  $100,000 
B)  $ 60,000 
C)  $ 39,600 
D)  nothing. 
A)  $100,000 
B)  $ 60,000 
C)  $ 39,600 
D)  nothing.

Question 15

The two approaches to taxing corporate income are the classic and the integrated systems.

Accepted Answer

A) True 
 B)False

Question 16

Assume that a U.S. company has a subsidiary in the United Kingdom that earned $100,000 (translated from pounds to dollars) in 1996 at a tax rate of 40 percent. The tax rate in the United States is 34 percent, and the withholding tax rate on dividends is 5 percent. If the subsidiary declares a 100% dividend, what is the maximum allowable tax credit according to U.S. tax law?

Accepted Answer

A)  $40,000 
B)  $ 3,000 
C)  $43,000 
D)  $34,000 
A)  $40,000 
B)  $ 3,000 
C)  $43,000 
D)  $34,000

Question 17

The basic concept of VAT is that a tax is applied at each stage of the production process.

Accepted Answer

A) True 
 B)False

Question 18

In the allocation of overhead in an MNE,

Accepted Answer

A)  U.S. tax law permits the allocation of U.S.-overhead to foreign source income. 
B)  U.S. tax law allows firms to allocate overhead based on manufacturing strategy. 
C)  Japanese have separated overhead allocation and corporate goals in order to drive down costs. 
D)  Japanese managers use allocation techniques primarily to measure costs. 
A)  U.S. tax law permits the allocation of U.S.-overhead to foreign source income. 
B)  U.S. tax law allows firms to allocate overhead based on manufacturing strategy. 
C)  Japanese have separated overhead allocation and corporate goals in order to drive down costs. 
D)  Japanese managers use allocation techniques primarily to measure costs.

Question 19

A tax that is applied at each stage of the production process is known as a

Accepted Answer

A)  corporate income tax. 
B)  withholding tax. 
C)  value-added tax. 
D)  sales tax. 
A)  corporate income tax. 
B)  withholding tax. 
C)  value-added tax. 
D)  sales tax.

Question 20

If the French subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily low transfer price,

Accepted Answer

A)  the French subsidiary will show relatively high profits. 
B)  the French government will collect relatively low corporate income tax. 
C)  U.S. Customs will collect relatively high tariffs. 
D)  the U.S. parent will show lower pre-tax profits. 
A)  the French subsidiary will show relatively high profits. 
B)  the French government will collect relatively low corporate income tax. 
C)  U.S. Customs will collect relatively high tariffs. 
D)  the U.S. parent will show lower pre-tax profits.

Which of the following is true concerning tax harmonization in the European Union?

A tax have is a place where foreign investors pay a minimum of tax to their home country.

Which of the following accurately describes how the U.S. taxes foreign branch earnings.

The taxation of both domestic and foreign source income is known as

Except for certain CFC cases, U.S. parent does not declare income from a foreign corporation for tax purposes until it actually receives a dividend.

According to changes in the U.S. tax laws related to transfer pricing,

In the U.S. tax law, an excess credit (if the foreign tax rate exceeds the U.S. tax rate) I.can be carried back and applied against foreign source income of prior years II.carried forward to be applied against foreign source income in future years

In the US, for foreign corporations that are not CFC

The concept where the tax effect should not have an impact on business decisions is

The value added tax is a (an)

According to the Foreign Sales Corporation Act,

The two approaches to taxing corporate income are the classic and the integrated systems.

The basic concept of VAT is that a tax is applied at each stage of the production process.

In the allocation of overhead in an MNE,

A tax that is applied at each stage of the production process is known as a

If the French subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily low transfer price,

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Budgeting and Performance Evaluation

International Auditing Issues

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Exam 16: International Taxation Issues

Which of the following is true concerning tax harmonization in the European Union?

A tax have is a place where foreign investors pay a minimum of tax to their home country.

Which of the following accurately describes how the U.S. taxes foreign branch earnings.

The taxation of both domestic and foreign source income is known as

Except for certain CFC cases, U.S. parent does not declare income from a foreign corporation for tax purposes until it actually receives a dividend.

According to changes in the U.S. tax laws related to transfer pricing,

In the U.S. tax law, an excess credit (if the foreign tax rate exceeds the U.S. tax rate) I.can be carried back and applied against foreign source income of prior years II.carried forward to be applied against foreign source income in future years

In the US, for foreign corporations that are not CFC

The concept where the tax effect should not have an impact on business decisions is

The value added tax is a (an)

According to the Foreign Sales Corporation Act,

The two approaches to taxing corporate income are the classic and the integrated systems.

The basic concept of VAT is that a tax is applied at each stage of the production process.

In the allocation of overhead in an MNE,

A tax that is applied at each stage of the production process is known as a

If the French subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily low transfer price,

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Budgeting and Performance Evaluation

International Auditing Issues

Filters