Exam 25: Taxation of International Transactions

Given the following information,determine whether Greta,an alien,is a U.S.resident for 2010.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

ForCo,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.ForCo's current year E & P is $150,000 and it's accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

U.S.income tax treaties:

USCo,a domestic corporation,has worldwide taxable income of $1,500,000,including a $300,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's post-1986 undistributed earnings and profits are $16 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)?

Which of the following is a true statement regarding a tax haven?

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 foreign-source royalty income did RainCo earn from these licenses?

The existence of a U.S.trade or business is a prerequisite to having effectively connected income.

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

Miles,Ltd. ,a foreign corporation,has a U.S.branch that earns effectively connected earnings and profits (after income taxes)of $600,000 for the tax year.The branch's U.S.net equity at the beginning of the tax year is $2 million and at the end of the tax year is $2,800,000.Miles is in a nontreaty country.Miles' branch profits tax for the year is:

Amelia,Inc. ,a domestic corporation,has worldwide taxable income of $8 million,including a $600,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's post-1986 undistributed E & P are $18 million and it has paid $12 million of foreign income taxes attributable to these earnings.What is Amelia's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation)?

Income from international communications activities earned by a U.S.person is sourced 100% in the United States.

Which of the following statements is false in regard to the U.S.income tax treaty program?

Assuming all sales are made to unrelated customers outside the CFC's country of incorporation,which of the following types of income earned by a CFC is Subpart F income?

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

Which of the following determinations does not require knowing the amounts of one's U.S.- versus foreign-source income?

Which of the following statements best describes the purpose of § 482?

Madison is a citizen of Italy and does not have permanent resident status in the United States.During the last three years she has spent a number of days in the United States. Is Madison treated as a U.S.resident for the current year?

Which of the following income items do not represent Subpart F income if earned by a controlled foreign corporation?

Interest paid to an unrelated party by a domestic corporation that historically earns 81% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

Which of the following is not a U.S.person?