Exam 25: Taxation of International Transactions

Which of the following statements regarding the taxation of U.S.real property gains recognized by foreign persons not engaged in a U.S.trade or business is false?

USCo,a domestic corporation,has worldwide taxable income of $500,000,including a $100,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's post-1986 undistributed earnings and profits are $1 million and it has paid $200,000 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)?

Copp,Inc. ,a domestic corporation,owns 40% of a CFC that has $50 million of earnings and profits for the current year.Included in that amount is $20 million of Subpart F income.The CFC has been a CFC for the entire year and makes no distributions in the current year.Copp must include in gross income (before any § 78 gross-up):

History,Inc. ,a domestic corporation,owns 60% of the stock of Past,Inc. ,a foreign corporation.For the current year,History receives a dividend of $50,000 from Past.Past's post-'86 E & P (after taxes)and foreign taxes are $4,000,000 and $300,000,respectively.What is History's total gross income from receipt of this dividend if it elects to claim the FTC for deemed-paid foreign taxes?

Drake Corporation,a domestic corporation,conducts all of its transactions in the U.S.dollar.It sells inventory for $1 million to a Canadian company when the exchange rate is $1US: $1.2Can.The Canadian company pays for the inventory when the exchange rate is $1US: $1.25Can.What is Drake's exchange gain or loss on this sale?

Which of the following persons are not typically concerned with the U.S.-sourcing rules for gross income?