Question 1

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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....

Question 4

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 sourcing of the interest income received by Josita?

Accepted Answer

Talmadge meets the 80% active foreign bu

Question 5

In creating a foreign subsidiary, to avoid current income taxation, a U.S. person should transfer ownership to the subsidiary of:

Accepted Answer

A)  Appreciated stock in another subsidiary. 
B)  Appreciated inventory for the new entity to sell. 
C)  Both a. and b. 
A)  Appreciated stock in another subsidiary. 
B)  Appreciated inventory for the new entity to sell. 
C)  Both a. and b.

Question 6

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

Accepted Answer

A)  Non-U.S. persons not engaged in a U.S. trade or business are indifferent as to whether any of their income is U.S. source. 
B)  All income earned by non-U.S. persons not engaged in a U.S. trade or business is treated as foreign source. 
C)  U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S. trade or business. 
D)  Certain U.S.-source investment income earned by non-U.S. persons not engaged in a U.S. trade or business may be subject to a U.S. withholding tax. 
A)  Non-U.S. persons not engaged in a U.S. trade or business are indifferent as to whether any of their income is U.S. source. 
B)  All income earned by non-U.S. persons not engaged in a U.S. trade or business is treated as foreign source. 
C)  U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S. trade or business. 
D)  Certain U.S.-source investment income earned by non-U.S. persons not engaged in a U.S. trade or business may be subject to a U.S. withholding tax.

Question 7

Which of the following statements regarding a non-U.S. person's U.S. tax consequences is true?

Accepted Answer

A)  Non-U.S. persons may be subject to U.S. withholding tax on U.S.-source investment income. 
B)  Non-U.S. individuals may be subject to U.S. income tax but non-U.S. corporations are never subject to U.S. income tax. 
C)  Non-U.S. persons are only subject to U.S. income or withholding tax if engaged in a U.S. trade or business. 
D)  Non-U.S. persons must be physically present in the United States before any U.S.-source income is subject to U.S. income or withholding tax. 
A)  Non-U.S. persons may be subject to U.S. withholding tax on U.S.-source investment income. 
B)  Non-U.S. individuals may be subject to U.S. income tax but non-U.S. corporations are never subject to U.S. income tax. 
C)  Non-U.S. persons are only subject to U.S. income or withholding tax if engaged in a U.S. trade or business. 
D)  Non-U.S. persons must be physically present in the United States before any U.S.-source income is subject to U.S. income or withholding tax.

Question 8

Which of the following statements regarding a non-U.S. person's U.S. tax consequences is true?

Accepted Answer

A)  Non-U.S. persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S. trade or business. 
B)  Non-U.S. persons are subject to U.S. income or withholding tax only if they are engaged in a U.S. trade or business. 
C)  Non-U.S. persons are not taxed on gains from U.S. real property as long as such property is not used in a U.S. trade or business. 
D)  Once a non-U.S. person is engaged in a U.S. trade or business, the non-U.S. person's worldwide income is subject to U.S. taxation. 
A)  Non-U.S. persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S. trade or business. 
B)  Non-U.S. persons are subject to U.S. income or withholding tax only if they are engaged in a U.S. trade or business. 
C)  Non-U.S. persons are not taxed on gains from U.S. real property as long as such property is not used in a U.S. trade or business. 
D)  Once a non-U.S. person is engaged in a U.S. trade or business, the non-U.S. person's worldwide income is subject to U.S. taxation.

Question 9

Unused foreign tax credits are carried back two years and then forward 20 years.

Accepted Answer

A) True 
 B)False

Question 10

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Accepted Answer

A)  Jen, Kathy, Leslie, David, Ben, and Mike are all U.S. citizens. 
B)  Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. David is married to Kathy. Mike is a foreign resident and citizen. 
C)  Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. Ben is Mike's son. Mike is a foreign resident and citizen. 
D)  Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. Mike is a foreign resident and citizen. 
A)  Jen, Kathy, Leslie, David, Ben, and Mike are all U.S. citizens. 
B)  Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. David is married to Kathy. Mike is a foreign resident and citizen. 
C)  Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. Ben is Mike's son. Mike is a foreign resident and citizen. 
D)  Jen, Kathy, Leslie, David, and Ben are all U.S. citizens. Mike is a foreign resident and citizen.

Question 11

Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and foreign corporations are subject to tax at capital gains rates under FIRPTA.

Accepted Answer

A) True 
 B)False

Question 12

The following persons own Schlecht Corporation, a non-U.S.entity.  
None of the shareholders are related. Subpart F income for the tax year is $300,000. No distributions are made. Which of the following statements is correct?

Accepted Answer

A)  Schlecht is not a CFC. 
B)  Chee includes $90,000 in gross income. 
C)  Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC. 
D)  Marina includes $24,000 in gross income. 
A)  Schlecht is not a CFC. 
B)  Chee includes $90,000 in gross income. 
C)  Marina is not a U.S. shareholder for purposes of determining whether Schlecht is a CFC. 
D)  Marina includes $24,000 in gross income.

Question 13

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
-Treasury powers over transfer pricing.

Accepted Answer

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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
-A country with very low or no income tax.

Accepted Answer

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

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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

Accepted Answer

A)  A non-U.S. person's effectively connected U.S. business income is taxed by the U.S. only if it is portfolio income. 
B)  A non-U.S. person's effectively connected U.S. business income is subject to U.S. income taxation. 
C)  A non-U.S. person may earn income from selling U.S. real property without incurring any U.S. income tax. 
D)  A non-U.S. person must spend at least 183 days in the United States before any effectively connected income is subject to U.S. taxation. 
A)  A non-U.S. person's effectively connected U.S. business income is taxed by the U.S. only if it is portfolio income. 
B)  A non-U.S. person's effectively connected U.S. business income is subject to U.S. income taxation. 
C)  A non-U.S. person may earn income from selling U.S. real property without incurring any U.S. income tax. 
D)  A non-U.S. person must spend at least 183 days in the United States before any effectively connected income is subject to U.S. taxation.

Question 19

Which of the following is not a foreign person?

Accepted Answer

A)  Foreign corporation 51% owned by U.S. shareholders. 
B)  Foreign corporation 100% owned by a domestic corporation. 
C)  Citizen of Germany with U.S. permanent resident status (i.e., green card). 
D)  Citizen of Italy who spends 14 days vacationing in the United States. 
A)  Foreign corporation 51% owned by U.S. shareholders. 
B)  Foreign corporation 100% owned by a domestic corporation. 
C)  Citizen of Germany with U.S. permanent resident status (i.e., green card). 
D)  Citizen of Italy who spends 14 days vacationing in the United States.

Question 20

Describe and diagram the timeline that most businesses use to enter the international markets.

Accepted Answer

Most businesses ente

Exam 25: Taxation of International Transactions

"Inbound" and "offshore" asset transfers by a U.S. business can be subject to immediate Federal income taxation under § 367.

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.

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 sourcing of the interest income received by Josita?

In creating a foreign subsidiary, to avoid current income taxation, a U.S. person should transfer ownership to the subsidiary of:

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

Which of the following statements regarding a non-U.S. person's U.S. tax consequences is true?

Which of the following statements regarding a non-U.S. person's U.S. tax consequences is true?

Unused foreign tax credits are carried back two years and then forward 20 years.

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Gains on the sale of U.S. real property held directly or indirectly through U.S. stock ownership by NRAs and foreign corporations are subject to tax at capital gains rates under FIRPTA.

The following persons own Schlecht Corporation, a non-U.S.entity. None of the shareholders are related. Subpart F income for the tax year is $300,000. No distributions are made. Which of the following statements is correct?

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 -Treasury powers over transfer pricing.

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

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 -A country with very low or no income tax.

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.

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?

Which of the following is not a foreign person?

Describe and diagram the timeline that most businesses use to enter the international markets.

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, Section 1231, and Recapture Provisions

Taxing Business Income

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 Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters