Question 1

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.

Question 2

In international corporate income taxation, what are the uses of the "sourcing rules" in computing Federal taxable
income?

Accepted Answer

The sourcing of income and deductions in...

Question 3

Match the definition with the correct term.
-Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

Accepted Answer

A)  Expatriate
B)  Resident
C)  Nonresident alien
D)  U.S. trade or business
E)  Branch profits taxF) Effectively connected income

Question 4

"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 5

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Accepted Answer

A) True 
 B)False

Question 6

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.

Question 7

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.

Question 8

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Upon repatriation to a CFC, it does not create dividend income.

Accepted Answer

A)  Foreign base company income
B)  Foreign personal holding company income
C)  Controlled foreign corporation
D)  U.S. shareholder
E)  Previously taxed incomeF) More than 10 percentG) More than 50 percentH) More than 80 percent

Question 9

Which of the following statements regarding the translation of foreign income taxes is true?

Accepted Answer

A)   Translation of foreign taxes into U.S. dollars helps manage the U.S. balance of trade.
B)   Foreign taxes are translated into U.S. dollars only when such translation provides a tax benefit to the taxpayer.
C)   Foreign taxes typically are paid in a foreign currency and, thus, must be converted to U.S. dollars when used as a FTC on a U.S. return.
D)   Translation of foreign taxes into U.S. dollars encourages foreign corporations to set up operations in the United States.

Question 10

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 11

OutCo, a controlled foreign corporation in Meena, earns $600,000 in net interest and dividend income from investments in the bonds and stock of unrelated companies. All of the dividend payors are located in Meena. OutCo's Subpart F income for the year is:

Accepted Answer

A)   $0.
B)   $0 only if OutCo is engaged in a trade or business in Meena.
C)   $600,000.
D)   $600,000 only if OutCo is engaged in a trade or business in Meena.

Question 12

BrazilCo, Inc., a foreign corporation with a U.S. trade or business, has U.S.-source income as follows.
Dividend income from unrelated investment activities $ 50,000
Net U.S.-source effectively connected income 600,000
Determine BrazilCo's total U.S. tax liability for the year, assuming a 35% corporate rate and no tax treaty. BrazilCo leaves its U.S. branch profits invested in the United States, and it does not otherwise repatriate any of its U.S. assets during the year.

Accepted Answer

BrazilCo's...

Question 13

Bryden, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year. Bryden's current year E & P is $350,000, and its accumulated E & P is $15 million. What is the current year Subpart F deemed dividend to USCo?

Accepted Answer

A)   $350,000.
B)   $550,000.
C)   $900,000.
D)   $15 million.

Question 14

GlobalCo, a foreign corporation not engaged in a U.S. trade or business, receives $80,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 24% of its income from foreign sources. How much of GlobalCo's interest income is U.S. source?

Accepted Answer

A)   $0.
B)   $19,200.
C)   $60,800.
D)   $80,000.

Question 15

Match the definition with the correct term.
-An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Accepted Answer

A)  Expatriate
B)  Resident
C)  Nonresident alien
D)  U.S. trade or business
E)  Branch profits taxF) Effectively connected income

Question 16

Which of the following transactions by a U.S. corporation may result in taxation under § 367?

Accepted Answer

A)   Incorporation of U.S branch as a U.S. corporation when the branch earns only foreign-source income.
B)   Incorporation of a U.S. branch by a U.S. corporation when the branch earns only U.S.-source income.
C)   Incorporation of a U.S. branch as a U.S. corporation if the new U.S. corporation also has foreign shareholders.
D)   Incorporation of a U.S. branch as a U.S. corporation if the new U.S. corporation has no foreign shareholders.

Question 17

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

Accepted Answer

A)   Non-U.S. persons are potentially 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 18

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)   U.S. income tax treaties are written to set up a "network" of up to five foreign countries that are covered byThe treaty language.
D)   None of the above statements is false.

Question 19

Match the definition with the correct term.
-A country with very low or no income tax.

Accepted Answer

A)  Inbound
B)  Outbound
C)  Allocation and apportionment
D)  Qualified business unit
E)  Tax havenF) Income tax treatyG) Section 482

Question 20

Fulton, Ltd., a foreign corporation, operates a U.S. branch that reports effectively connected U.S. earnings and profits (after income taxes)  of $800,000 for the tax year. The branch's U.S. net equity at the beginning of the tax year is $2 million and at the end of the tax year is $1.5 million. Fulton is organized in a nontreaty country. Fulton's dividend equivalent amount for the year is:

Accepted Answer

A)   $1,300,000.
B)   $800,000.
C)   $500,000.
D)   $300,000.

Exam 25: Taxation of International Transactions

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

Correct Answer
verified

Which of the following statements regarding the translation of foreign income taxes is true?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Bryden, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year. Bryden's current year E & P is $350,000, and its accumulated E & P is $15 million. What is the current year Subpart F deemed dividend to USCo?

Correct Answer
verified

Match the definition with the correct term. -Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

Correct Answer
verified

An advance pricing agreement (APA) is used between:

Correct Answer
verified

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.

Correct Answer
verified

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Upon repatriation to a CFC, it does not create dividend income.

Correct Answer
verified

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

Correct Answer
verified

Which of the following is not a foreign person?

Correct Answer
verified

Match the definition with the correct term. -A country with very low or no income tax.

Correct Answer
verified

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Correct Answer
verified

GlobalCo, a foreign corporation not engaged in a U.S. trade or business, receives $80,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 24% of its income from foreign sources. How much of GlobalCo's interest income is U.S. source?

Correct Answer
verified

Correct Answer
verified
BrazilCo's...
View Answer

In international corporate income taxation, what are the uses of the "sourcing rules" in computing Federal taxable income?

Correct Answer
verified
The sourcing of income and deductions in...
View Answer

Correct Answer
verified

Which of the following transactions by a U.S. corporation may result in taxation under § 367?

Correct Answer
verified

Match the definition with the correct term. -An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Correct Answer
verified

OutCo, a controlled foreign corporation in Meena, earns $600,000 in net interest and dividend income from investments in the bonds and stock of unrelated companies. All of the dividend payors are located in Meena. OutCo's Subpart F income for the year is:

Correct Answer
verified

Exam 25: Taxation of International Transactions

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

Correct AnswerverifiedShow Answer

Which of the following statements regarding the translation of foreign income taxes is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bryden, a controlled foreign corporation owned 100% by USCo, earned $900,000 in Subpart F income for the current year. Bryden's current year E & P is $350,000, and its accumulated E & P is $15 million. What is the current year Subpart F deemed dividend to USCo?

Correct AnswerverifiedShow Answer

Match the definition with the correct term. -Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

Correct AnswerverifiedShow Answer

An advance pricing agreement (APA) is used between:

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 tax at capital gains rates under FIRPTA.

Correct AnswerverifiedShow Answer

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Upon repatriation to a CFC, it does not create dividend income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not a foreign person?

Correct AnswerverifiedShow Answer

Match the definition with the correct term. -A country with very low or no income tax.

Correct AnswerverifiedShow Answer

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Correct AnswerverifiedShow Answer

GlobalCo, a foreign corporation not engaged in a U.S. trade or business, receives $80,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 24% of its income from foreign sources. How much of GlobalCo's interest income is U.S. source?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedBrazilCo's...View AnswerShow Answer

In international corporate income taxation, what are the uses of the "sourcing rules" in computing Federal taxable income?

Correct AnswerverifiedThe sourcing of income and deductions in...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following transactions by a U.S. corporation may result in taxation under § 367?

Correct AnswerverifiedShow Answer

Match the definition with the correct term. -An individual who gives up U.S. citizenship to avoid U.S. income taxes.

Correct AnswerverifiedShow Answer

OutCo, a controlled foreign corporation in Meena, earns $600,000 in net interest and dividend income from investments in the bonds and stock of unrelated companies. All of the dividend payors are located in Meena. OutCo's Subpart F income for the year is:

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
BrazilCo's...
View Answer

Correct Answer
verified
The sourcing of income and deductions in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified