FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 25: Taxation of International Transactions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

The following income of a foreign corporation is not subject to the regular U.S. corporate income tax rates.

A) FIRPTA gains.
B) Capital gains effectively connected with a U.S. trade or business.
C) Net long-term capital gains, where no U.S. trade or business exists.
D) Fixed, determinable, annual or periodic (FDAP) income effectively connected with a U.S. trade or business.

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

The U.S. system for taxing income earned outside its borders by U.S. persons is referred to as the territorial approach, because only income earned within the U.S. border is subject to taxation.

A) True
B) False

Correct Answer

verified

False

Question 3

Multiple Choice

Review LaterAdd Note

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

Chipper, Inc., a U.S. corporation, reports worldwide taxable income of $1 million, including a $300,000 dividend from Emma, Inc., a foreign corporation. Chipper's U.S. tax liability before FTC is $340,000. Chipper owns 20% of Emma. Emma's E & P after taxes is $8 million and it has paid foreign taxes of $2 million attributable to that E & P. If Chipper elects the FTC, its U.S. gross income with regard to the dividend from Emma is:

Which of the following statements regarding foreign persons not engaged in a U.S. trade or business is true?

Which of the following foreign taxes paid by a U.S. corporation may be eligible for the foreign tax credit?

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 euro: $1.35. Payment is due in 90 days. Arendt acquires 200,000 euros and pays for the machine when 1 euro: $1.15. What is the basis of the asset to Arendt and what is the foreign currency exchange gain or loss, if any?

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

Which of the following is a special tax regime imposed on certain foreign persons engaged in a U.S. trade or business?

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?

Krebs, Inc., a U.S. corporation, operates an unincorporated branch manufacturing operation in the U.K. Krebs, Inc., reports $900,000 of taxable income from the U.K. branch on its U.S. tax return, along with $1,600,000 of taxable income from its U.S. operations. The U.K. branch income is all general limitation basket income. Krebs paid $270,000 in U.K. income taxes related to the $900,000 in branch income. Assuming a U.S. tax rate of 35%, what is Krebs' U.S. tax liability after any allowable foreign tax credits?

An appropriate transfer price is one that considers the risks, assets, and functions of the persons to whom income is assigned.

Kunst, a U.S. corporation, generates $100,000 of foreign-source income in the general income basket and $40,000 Of foreign­source income in the passive income basket. Kunst's worldwide taxable income is $1,200,000, and its US. tax liability before FTC is $420,000. Foreign taxes attributable to the general income basket are $60,000 and to The passive income are $4,000. What is Kunst's foreign tax credit for the tax year?

Without the foreign tax credit, double taxation would result when:

Carol, a citizen and resident of Adagio, reports gross income that is effectively connected with a U.S. business. No deductions are allowed against this income, and Carol's U.S. tax rate is a flat 30 percent.

Which of the following determinations does not require knowing the amounts of one's U.S.­ versus foreign­source Income?

Twenty unrelated U.S. persons equally own all of the stock of Quigley, a foreign corporation. Quigley is a CFC.

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

Dividends received from Murdock Corp., a corporation organized in Sustenato that earns 70% of its income from U.S. business activities, are 70% U.S.-source income.

Generally, accrued foreign income taxes are translated at the: