Question 1

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

Accepted Answer

A)  There are about 70 bilateral income tax treaties between the U.S.and other countries.
B)  Tax treaties generally provide for primary taxing rights that require the other treaty partner to allow a credit for the taxes paid on the twice-taxed income.
C)  Residence of the taxpayer is an important consideration in applying tax treaties, while the presence of a permanent establishment is not.
D)  None of the above statements is false.E) A) and D)
F) None of the above

Question 2

A domestic corporation is one whose assets are primarily (> 50%) located in the U.S.

Accepted Answer

A) True 
 B)False

Question 3

An advance pricing agreement (APA)  is used between:

Accepted Answer

A)  Two or more governments.
B)  Two related taxpayers.
C)  The taxpayer and the IRS.
D)  The IRS and U.S.taxing authorities.E) A) and D)
F) B) and C)

Question 4

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

Accepted Answer

A)  Dividends are sourced based on the residence of the recipient.
B)  Dividends from a U.S.corporation are U.S.source, without regard to whether the U.S.corporation is an 80-20 company.
C)  Dividends from a U.S.corporation are foreign-source, if the U.S.corporation is an 80-20 company.
D)  Dividends from a U.S.corporation are foreign-source based on the percentage of foreign-source income earned by the U.S.payor.E) A) and B)
F) A) and C)

Question 5

USCo, a domestic corporation, reports worldwide taxable income of $1,500,000, including a $300,000 dividend from ForCo, a wholly-owned foreign corporation.ForCo's undistributed earnings and profits are $15 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) ?

Accepted Answer

A)  $200,000.
B)  $300,000.
C)  $10 million.
D)  $15 million.E) B) and C)
F) B) and D)

Question 6

Chang, an NRA, is employed by Fisher, Inc., a foreign corporation.In November, Chang spends 12 days in the United States performing consulting services for Fisher's U.S.branch.She earns $5,000 per month.A month includes 20 workdays.

Accepted Answer

A)  Chang has no U.S.-source income, under the commercial traveler exception.
B)  Chang has $3,000 U.S.-source income, since her foreign employer has a U.S.branch.
C)  Chang has $60,000 U.S.-source income which is exempt from U.S.taxation, since she is in the U.S.for 90 days or less.
D)  Chang has $60,000 U.S.-source income which is exempt from U.S.taxation, since she is working for a foreign employer.E) None of the above
F) All of the above

Question 7

Dark, Inc., a U.S.corporation, operates Dunkel, an unincorporated branch manufacturing operation in Germany.Dark reports $100,000 of taxable income from Dunkel on its U.S.tax return, along with $400,000 of taxable income from its U.S.operations.Dark paid $40,000 in German income taxes related to the $100,000 of Dunkel income. Assuming a U.S.tax rate of 35%, what is Dark's U.S.tax liability after any allowable foreign tax credits?

Accepted Answer

A)  $35,000.
B)  $135,000.
C)  $140,000.
D)  $175,000.E) B) and D)
F) A) and D)

Question 8

Dividends received from a domestic corporation are totally U.S.source:

Accepted Answer

A)  If the corporation earns at least 80% of its gross income over the immediately preceding three tax years from the active conduct of a U.S.trade or business.
B)  If the corporation earns at least 25% of its gross income over the immediately preceding three tax years from the active conduct of a U.S.trade or business.
C)  Unless the corporation earns at least 80% of its gross income over the immediately preceding three tax years from the active conduct of a foreign trade or business.
D)  Unless the corporation earns at least 25% of its gross income over the immediately preceding three tax years from the active conduct of a foreign trade or business.
E)  In all of the above cases.F) All of the above
G) B) and E)

Question 9

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 taxation under FIRPTA.

Accepted Answer

A) True 
 B)False

Question 10

Given the following information, determine whether Greta, an alien, is a U.S.resident for 2012.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> If Greta would prefer a different resul...

Question 11

OutCo, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year.OutCo's current year E & P is $250,000 and its accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

Accepted Answer

A)  $250,000.
B)  $650,000.
C)  $900,000.
D)  $18 million.E) C) and D)
F) B) and C)

Question 12

In allocating interest expense between U.S.and foreign sources, a taxpayer must use the tax basis of the income-producing assets.

Accepted Answer

A) True 
 B)False

Question 13

The § 367 cross-border transfer rules seem to counteract other favorable tax provisions that allow the taxpayer to defer gross income, e.g.§§ 351 and 368. What is the rationale for eliminating this deferral? Provide two examples of transactions to which § 367 would apply.

Accepted Answer

Section 367 provides for the immediate t...

Question 14

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

Accepted Answer

A)  Foreign 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 foreign 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 foreign persons not engaged in a U.S.trade or business may be subject to a U.S.withholding tax.E) None of the above
F) All of the above

Question 15

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

Accepted Answer

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

Question 16

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Accepted Answer

A)  The Subpart F income provisions provide certainty as to the U.S.income tax treatment of cross-border transactions.
B)  The Subpart F income provisions allow deferral of foreign-source income from U.S.taxation.
C)  The Subpart F income provisions prevent shifting of income from the United States to low-tax foreign jurisdictions.
D)  The Subpart F income provisions prevent shifting of income from the United States to high-tax foreign jurisdictions.E) None of the above
F) B) and C)

Question 17

Collins, Inc.received gross foreign-source dividend income of $250,000.Foreign taxes withheld on the dividend were $25,000 and no § 902 credit is available.Its worldwide taxable income for the tax year is $500,000.U.S.tax before the FTC is $175,000.Collins' current year FTC is $87,500.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  Foreign persons with U.S.activities.
B)  Foreign persons with only foreign activities.
C)  U.S.employees working abroad.
D)  U.S.persons with foreign activities.E) A) and D)
F) B) and C)

Question 19

Copp, Inc., a domestic corporation, owns 30% 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.Copp 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) :

Accepted Answer

A)  $0.
B)  $50 million.
C)  $20 million.
D)  $6 million.E) A) and B)
F) A) and C)

Question 20

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.E) All of the above
F) B) and C)

Exam 25: Taxation of International Transactions

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

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

Correct Answer
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A domestic corporation is one whose assets are primarily (> 50%) located in the U.S.

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

Correct Answer
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Correct Answer
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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 taxation under FIRPTA.

Correct Answer
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Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Correct Answer
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Correct Answer
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Chang, an NRA, is employed by Fisher, Inc., a foreign corporation.In November, Chang spends 12 days in the United States performing consulting services for Fisher's U.S.branch.She earns $5,000 per month.A month includes 20 workdays.

Correct Answer
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Correct Answer
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In allocating interest expense between U.S.and foreign sources, a taxpayer must use the tax basis of the income-producing assets.

Correct Answer
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Given the following information, determine whether Greta, an alien, is a U.S.resident for 2012.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Correct Answer
verified
If Greta would prefer a different resul...
View Answer

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

Correct Answer
verified

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.

Correct Answer
verified

Collins, Inc.received gross foreign-source dividend income of $250,000.Foreign taxes withheld on the dividend were $25,000 and no § 902 credit is available.Its worldwide taxable income for the tax year is $500,000.U.S.tax before the FTC is $175,000.Collins' current year FTC is $87,500.

Correct Answer
verified

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

Correct Answer
verified

An advance pricing agreement (APA) is used between:

Correct Answer
verified

OutCo, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year.OutCo's current year E & P is $250,000 and its accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

Correct Answer
verified

Dividends received from a domestic corporation are totally U.S.source:

Correct Answer
verified

The § 367 cross-border transfer rules seem to counteract other favorable tax provisions that allow the taxpayer to defer gross income, e.g.§§ 351 and 368. What is the rationale for eliminating this deferral? Provide two examples of transactions to which § 367 would apply.

Correct Answer
verified
Section 367 provides for the immediate t...
View Answer

Exam 25: Taxation of International Transactions

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A domestic corporation is one whose assets are primarily (> 50%) located in the U.S.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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 taxation under FIRPTA.

Correct AnswerverifiedShow Answer

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Chang, an NRA, is employed by Fisher, Inc., a foreign corporation.In November, Chang spends 12 days in the United States performing consulting services for Fisher's U.S.branch.She earns $5,000 per month.A month includes 20 workdays.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In allocating interest expense between U.S.and foreign sources, a taxpayer must use the tax basis of the income-producing assets.

Correct AnswerverifiedShow Answer

Given the following information, determine whether Greta, an alien, is a U.S.resident for 2012.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Correct Answerverified If Greta would prefer a different resul...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Collins, Inc.received gross foreign-source dividend income of $250,000.Foreign taxes withheld on the dividend were $25,000 and no § 902 credit is available.Its worldwide taxable income for the tax year is $500,000.U.S.tax before the FTC is $175,000.Collins' current year FTC is $87,500.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An advance pricing agreement (APA) is used between:

Correct AnswerverifiedShow Answer

OutCo, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year.OutCo's current year E & P is $250,000 and its accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

Correct AnswerverifiedShow Answer

Dividends received from a domestic corporation are totally U.S.source:

Correct AnswerverifiedShow Answer

The § 367 cross-border transfer rules seem to counteract other favorable tax provisions that allow the taxpayer to defer gross income, e.g.§§ 351 and 368. What is the rationale for eliminating this deferral? Provide two examples of transactions to which § 367 would apply.

Correct AnswerverifiedSection 367 provides for the immediate t...View AnswerShow Answer

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If Greta would prefer a different resul...
View Answer

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Section 367 provides for the immediate t...
View Answer