Question 1

ForCo,a foreign corporation,purchases widgets from USCo,Inc. ,its U.S.parent corporation.The widgets are sold by ForCo to another unrelated foreign corporation in the same country as ForCo.The income from sale of the widgets by ForCo is foreign base company sales income.

Accepted Answer

A) True 
 B)False

Question 2

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) None of the above
F) A) and B)

Question 3

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.Its U.S.tax before FTC is $175,000.Collins' current year FTC is $87,500.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

"Inbound" and "offshore" transfers are exempt from taxation under § 367.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the primary purposes of income tax treaties.

Accepted Answer

The primary purpose of an income tax tre...

Question 7

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

Accepted Answer

A)  A country with high internal taxes.
B)  A country with no or low internal taxes.
C)  A country without income tax treaties.
D)  A country that prohibits "treaty shopping."
E)  None of the above statements is true.F) A) and D)
G) All of the above

Question 8

The following persons own Good Corporation,a foreign corporation.

None of the shareholders are related.Subpart F income for the tax year is $200,000.No distributions are made.Which of the following statements is correct?

Accepted Answer

A)  Good Corporation is not a CFC.
B)  Chee includes $60,000 in gross income.
C)  Marina includes $16,000 in gross income.
D)  Marina is not a U.S.shareholder.
E)  None of the above statements is correct.F) A) and C)
G) A) and E)

Question 9

A foreign corporation,not resident in a treaty country,has a U.S.branch that earns effectively connected E & P of $4 million for the tax year and increases its investments in U.S.property (its U.S.net equity) by $1,600,000.It pays a U.S.corporate income tax of $2,153,846.Its branch profits tax is:

Accepted Answer

A)  $2,153,846.
B)  $720,000.
C)  $1,200,000.
D)  $2,873,846.
E)  Some other amount.F) B) and C)
G) C) and D)

Question 10

Given the following information,determine if FanCo,a foreign corporation,is a CFC.
  
Patricia is Murray's daughter.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Murray,Nancy,and Patricia are U.S.share...

Question 11

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?

Accepted Answer

A)  Gains from the disposition of U.S.real property are taxed to foreign persons notwithstanding the general exemption of capital gains from U.S.taxation.
B)  Gains from the disposition of U.S.real property are not taxed to foreign persons because real property gains are specifically exempt from U.S.taxation.
C)  Gains from the disposition of U.S.real property are taxed in the U.S.because such gains are treated as if they are effectively connected to a U.S.trade or business.
D)  Gains from the disposition of U.S.real property are taxed to foreign persons without regard to whether such foreign persons are engaged in a U.S.trade or business.E) A) and B)
F) A) and D)

Question 12

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) B) and C)
F) A) and D)

Question 13

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

Accepted Answer

A)  Foreign persons are not subject to U.S.tax if not engaged in a U.S.trade or business.
B)  Foreign persons with any U.S.-source income are taxed on any net investment income (after expenses) .
C)  Foreign persons are subject to potential withholding taxes on the gross amount of U.S.-source investment income.
D)  Foreign persons with only U.S.-source investment income are exempt from U.S.tax.
E)  None of the above statements are true.F) None of the above
G) All of the above

Question 14

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) ?

Accepted Answer

A)  $0.
B)  $400,000.
C)  $12 million.
D)  $18 million
E)  Some other amount.F) C) and E)
G) A) and D)

Question 15

Performance,Inc. ,a U.S.corporation,owns 100% of Krumb,Ltd. ,a foreign corporation.Krumb earns only general limitation income.During the current year,Krumb paid Performance a $200,000 dividend.The § 902 credit associated with this dividend is $30,000.The foreign jurisdiction requires a withholding tax of 30%,so Performance received only $140,000 in cash as a result of the dividend.What is Performance's total U.S.gross income reported as a result of the $140,000 cash dividend received?

Accepted Answer

A)  $0.
B)  $80,000.
C)  $140,000.
D)  $230,000.E) All of the above
F) B) and C)

Question 16

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) :

Accepted Answer

A)  $0.
B)  $8 million.
C)  $20 million.
D)  $50 million.
E)  Some other amount.F) None of the above
G) A) and C)

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

All losses are apportioned against U.S.-source income.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  Foreign persons are never subject to U.S.income tax.
B)  Foreign persons are subject to U.S.income tax only on gains from U.S.real property.
C)  Foreign persons are subject to a withholding tax on U.S.-source FDAP income.
D)  Foreign persons are subject to a withholding tax on foreign-source FDAP income.E) None of the above
F) B) and C)

Question 20

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the U.S.dollar as its functional currency.

Accepted Answer

A) True 
 B)False

Exam 9: Taxation of International Transactions

All losses are apportioned against U.S.-source income.

Correct Answer
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Correct Answer
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Given the following information,determine if FanCo,a foreign corporation,is a CFC. Patricia is Murray's daughter.

Correct Answer
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Murray,Nancy,and Patricia are U.S.share...
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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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ForCo,a foreign corporation,purchases widgets from USCo,Inc. ,its U.S.parent corporation.The widgets are sold by ForCo to another unrelated foreign corporation in the same country as ForCo.The income from sale of the widgets by ForCo is foreign base company sales income.

Correct Answer
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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?

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

Correct Answer
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A foreign corporation,not resident in a treaty country,has a U.S.branch that earns effectively connected E & P of $4 million for the tax year and increases its investments in U.S.property (its U.S.net equity) by $1,600,000.It pays a U.S.corporate income tax of $2,153,846.Its branch profits tax is:

Correct Answer
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Discuss the primary purposes of income tax treaties.

Correct Answer
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The primary purpose of an income tax tre...
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The existence of a U.S.trade or business is a prerequisite to having effectively connected income.

Correct Answer
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"Inbound" and "offshore" transfers are exempt from taxation under § 367.

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

Correct Answer
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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.

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

Correct Answer
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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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The following persons own Good Corporation,a foreign corporation. None of the shareholders are related.Subpart F income for the tax year is $200,000.No distributions are made.Which of the following statements is correct?

Correct Answer
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A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the U.S.dollar as its functional currency.

Correct Answer
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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.Its U.S.tax before FTC is $175,000.Collins' current year FTC is $87,500.

Correct Answer
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Exam 9: Taxation of International Transactions

All losses are apportioned against U.S.-source income.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Given the following information,determine if FanCo,a foreign corporation,is a CFC. Patricia is Murray's daughter.

Correct Answerverified Murray,Nancy,and Patricia are U.S.share...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

ForCo,a foreign corporation,purchases widgets from USCo,Inc. ,its U.S.parent corporation.The widgets are sold by ForCo to another unrelated foreign corporation in the same country as ForCo.The income from sale of the widgets by ForCo is foreign base company sales income.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A foreign corporation,not resident in a treaty country,has a U.S.branch that earns effectively connected E & P of $4 million for the tax year and increases its investments in U.S.property (its U.S.net equity) by $1,600,000.It pays a U.S.corporate income tax of $2,153,846.Its branch profits tax is:

Correct AnswerverifiedShow Answer

Discuss the primary purposes of income tax treaties.

Correct AnswerverifiedThe primary purpose of an income tax tre...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

"Inbound" and "offshore" transfers are exempt from taxation under § 367.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The following persons own Good Corporation,a foreign corporation. None of the shareholders are related.Subpart F income for the tax year is $200,000.No distributions are made.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the U.S.dollar as its functional currency.

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.Its U.S.tax before FTC is $175,000.Collins' current year FTC is $87,500.

Correct AnswerverifiedShow Answer

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Murray,Nancy,and Patricia are U.S.share...
View Answer

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Correct Answer
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The primary purpose of an income tax tre...
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