Question 1

A nonresident alien cannot

Accepted Answer

A) elect to be treated as a resident alien. 
B) elect to be treated as a resident alien before satisfying the substantial presence test for the calendar year following the election year if unmarried. 
C) make an irrevocable election to be treated as a resident alien after satisfying the substantial presence test. 
D) make an election to be treated as a resident alien if married to a resident alien. 
A) elect to be treated as a resident alien. 
B) elect to be treated as a resident alien before satisfying the substantial presence test for the calendar year following the election year if unmarried. 
C) make an irrevocable election to be treated as a resident alien after satisfying the substantial presence test. 
D) make an election to be treated as a resident alien if married to a resident alien.

Question 2

Jacque,a single nonresident alien,is in the United States for 80 days in the current year engaging in the conduct of a U.S.trade or business.Jacque has $3,000 of interest income earned on a bank account in his home county and $1,800 of interest income earned on a bank account located in Addison,Illinois.How will the dividend be taxed and how will the tax be collected?

Accepted Answer

The United States do

Question 3

U.S.Corporation owns 45% of the stock of Foreign Corporation.Foreign Corporation is incorporated in Country T.In its first year of operations,Foreign Corporation earns 100,000 frugs of E&P,pays a 20,000- frug dividend to U.S.Corporation,and pays 5,000 frugs in income taxes.The exchange rate between the dollar and the frug is: first year average,1 frug = $0.20;yearend,1 frug = $0.25);tax payment date,1 frug = $0.30;and dividend payment date,1 frug = $0.28.What is the translated foreign tax amount attributable to the dividend for deemed paid foreign tax credit purposes?

Accepted Answer

A) $200.00 
B) $250.00 
C) $300.00 
D) $280.00 
A) $200.00 
B) $250.00 
C) $300.00 
D) $280.00

Question 4

A controlled foreign corporation (CFC)is incorporated in Country B,and is 100% owned by American Manufacturing Corporation.It purchases raw materials from its U.S.parent corporation,manufactures widgets,and sells 70% of the widgets to unrelated purchasers in Country A and 30% to unrelated purchasers in Country B.All widgets will be used in the countries in which they are purchased.The sales produce $100,000 of taxable income.The foreign-base company sales income reportable by American Manufacturing Corporation under the Subpart F rules is

Accepted Answer

A) $0. 
B) $30,000. 
C) $70,000. 
D) $100,000. 
A) $0. 
B) $30,000. 
C) $70,000. 
D) $100,000.

Question 5

U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation

Accepted Answer

A) must include the $100,000 profit in its current-year U.S.tax return. 
B) never has to include Foreign Corporation's profits in its U.S.tax return. 
C) reports Foreign Corporation's profits in its U.S.tax return in the same manner it would if Foreign Corporation were instead a foreign branch. 
D) must include Foreign Corporation's profits in its U.S.tax return when they are paid to U.S.Corporation in the form of a dividend. 
A) must include the $100,000 profit in its current-year U.S.tax return. 
B) never has to include Foreign Corporation's profits in its U.S.tax return. 
C) reports Foreign Corporation's profits in its U.S.tax return in the same manner it would if Foreign Corporation were instead a foreign branch. 
D) must include Foreign Corporation's profits in its U.S.tax return when they are paid to U.S.Corporation in the form of a dividend.

Question 6

A foreign corporation with a single class of stock is owned 8% by Bert,49% by Xi Yong,30% by Ernie,and 13% by Mark.Bert,Ernie,and Mark are U.S.citizens,and Xi Yong is a nonresident alien.Bert is Ernie's son.Is the foreign corporation a controlled foreign corporation (CFC)?

Accepted Answer

It is a CFC.(Bert is now a U.S

Question 7

Domestic corporation B owns 200 of the 400 outstanding shares of foreign corporation K's stock.U.S.citizen R owns the remaining K stock.The domestic corporation held the stock for 40 days two years ago,365 days last year,and 80 days this year.None of K's income is Subpart F income.The foreign corporation has E&P of $50,000 for each of the three years in question.None of the years is a leap year.On the 80th day of the current year,the stock is sold by B to R in a transaction in which a $100,000 gain is recognized by B.What part of B's gain is capital gain?

Accepted Answer

The answer of Domestic corporation B owns 200 of the...

Question 8

Overseas business activities conducted by U.S.corporations receive which one of the following favorable tax breaks?

Accepted Answer

A) Foreign subsidiaries of U.S.corporations are exempt from the U.S.corporate income tax unless they earn U.S.-source investment or trade or business income. 
B) Foreign subsidiaries of U.S.corporations are always exempt from the U.S.corporate income tax even if they earn U.S.-source investment or trade or business income. 
C) Domestic corporations conducting business in a foreign country through a branch office or facility can exempt non-U.S.income from the U.S.corporate income tax. 
D) All of the above are correct. 
A) Foreign subsidiaries of U.S.corporations are exempt from the U.S.corporate income tax unless they earn U.S.-source investment or trade or business income. 
B) Foreign subsidiaries of U.S.corporations are always exempt from the U.S.corporate income tax even if they earn U.S.-source investment or trade or business income. 
C) Domestic corporations conducting business in a foreign country through a branch office or facility can exempt non-U.S.income from the U.S.corporate income tax. 
D) All of the above are correct.

Question 9

Domestic corporation X owns all the stock of controlled foreign corporation (CFC)T.X's acquisition cost for the CFC investment is $150,000.The CFC reports E&P of $200,000 since the domestic corporation acquired its interest,of which $120,000 was Subpart F income.The CFC makes a cash distribution of $90,000 to the domestic corporation.What is the domestic corporation's basis for its investment in T immediately after the cash distribution?

Accepted Answer

A) $150,000 
B) $180,000 
C) $230,000 
D) none of the above 
A) $150,000 
B) $180,000 
C) $230,000 
D) none of the above

Question 10

Which of the following is an advantage of conducting foreign operations through a branch?

Accepted Answer

A) Foreign branch losses can offset domestic income. 
B) Foreign branch income is taxed at a lower rate than domestic income. 
C) The parent's assets are protected from foreign branch creditors. 
D) Foreign branch income is taxed by both the United States and the host country. 
A) Foreign branch losses can offset domestic income. 
B) Foreign branch income is taxed at a lower rate than domestic income. 
C) The parent's assets are protected from foreign branch creditors. 
D) Foreign branch income is taxed by both the United States and the host country.

Question 11

Excess foreign taxes in one basket cannot offset limitation amounts in another basket.

Accepted Answer

A) True 
 B)False

Question 12

Ashley,a U.S.citizen,works in England for part of the year.She earns $40,000 in England,paying $10,000 in income taxes to the British government.Her U.S.income is $60,000 and she pays $12,000 in U.S.taxes.Her taxes on her worldwide income are $20,000.What is Ashley's foreign tax credit? Assume she does not qualify for the foreign-earned income exclusion.

Accepted Answer

A) $8,000 
B) $10,000 
C) $12,000 
D) none of the above 
A) $8,000 
B) $10,000 
C) $12,000 
D) none of the above

Question 13

What are the consequences of classification as a corporate inversion?

Accepted Answer

A) The foreign corporation will be treated as if it is a U.S.corporation. 
B) Foreign tax credits will be disallowed on all future earnings. 
C) The corporation will be subject to a flat 35% tax rate. 
D) If more than half of the shareholders of the new company are the same as the former company,the corporation is considered a U.S.corporation. 
A) The foreign corporation will be treated as if it is a U.S.corporation. 
B) Foreign tax credits will be disallowed on all future earnings. 
C) The corporation will be subject to a flat 35% tax rate. 
D) If more than half of the shareholders of the new company are the same as the former company,the corporation is considered a U.S.corporation.

Question 14

Perry,a U.S.citizen,is transferred by his employer to Japan for a three-year assignment.Which one of the following items is not excluded under Sec.911?

Accepted Answer

A) base salary 
B) cost-of-living allowance 
C) housing costs 
D) premiums paid on first $50,000 of group term life insurance 
A) base salary 
B) cost-of-living allowance 
C) housing costs 
D) premiums paid on first $50,000 of group term life insurance

Question 15

A taxpayer may make the election to either deduct or take a credit for foreign income taxes

Accepted Answer

A) annually. 
B) once every five years. 
C) only once,and the election applies to all future tax years. 
D) No election is available. 
A) annually. 
B) once every five years. 
C) only once,and the election applies to all future tax years. 
D) No election is available.

Question 16

Identify which of the following statements is true.

Accepted Answer

A) Capital gains earned in the United States,other than in the conduct of a U.S.trade or business,are taxed to a nonresident alien only if the alien is physically present in the United States for at least 183 days during the tax year. 
B) Aliens,who are U.S.residents,are taxed only on their U.S.income. 
C) A nonresident alien from a nontreaty country is taxed at a 35% rate on U.S.source investment income without the benefit of any deductions. 
D) All of the above are true. 
A) Capital gains earned in the United States,other than in the conduct of a U.S.trade or business,are taxed to a nonresident alien only if the alien is physically present in the United States for at least 183 days during the tax year. 
B) Aliens,who are U.S.residents,are taxed only on their U.S.income. 
C) A nonresident alien from a nontreaty country is taxed at a 35% rate on U.S.source investment income without the benefit of any deductions. 
D) All of the above are true.

Question 17

Identify which of the following statements is true.

Accepted Answer

A) Foreign-base company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CF
C) from its U.S.parent corporation and is sold to unrelated persons in Country Z. 
B) Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length. 
C) One tax avoidance practice which Sec.482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's-length price that would be used by unrelated parties. 
D) All of the above are true. 
A) Foreign-base company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CF
C) from its U.S.parent corporation and is sold to unrelated persons in Country Z. 
B) Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length. 
C) One tax avoidance practice which Sec.482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's-length price that would be used by unrelated parties. 
D) All of the above are true.

Question 18

Compare the U.S.tax treatment of a nonresident alien and a resident alien,both of whom earn U.S.trade or business and U.S.investment income.

Accepted Answer

A nonresident alien who earns investment

Question 19

U.S.citizen Patrick is a bona fide resident of a foreign country for all of the current year.Patrick uses a calendar year as his tax year.He has $100,000 of self-employment income and incurs $20,000 in housing expenses.The base housing cost amount is $15,616.The deduction for housing expenses is

Accepted Answer

A) $13,184 for AGI. 
B) $13,184 from AGI. 
C) $4,384 for AGI. 
D) $6,816 from AGI. 
A) $13,184 for AGI. 
B) $13,184 from AGI. 
C) $4,384 for AGI. 
D) $6,816 from AGI.

Question 20

Excess foreign tax credits can be carried back one year and forward five years.

Accepted Answer

A) True 
 B)False

A nonresident alien cannot

U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation

A foreign corporation with a single class of stock is owned 8% by Bert,49% by Xi Yong,30% by Ernie,and 13% by Mark.Bert,Ernie,and Mark are U.S.citizens,and Xi Yong is a nonresident alien.Bert is Ernie's son.Is the foreign corporation a controlled foreign corporation (CFC)?

Overseas business activities conducted by U.S.corporations receive which one of the following favorable tax breaks?

Which of the following is an advantage of conducting foreign operations through a branch?

Excess foreign taxes in one basket cannot offset limitation amounts in another basket.

What are the consequences of classification as a corporate inversion?

Perry,a U.S.citizen,is transferred by his employer to Japan for a three-year assignment.Which one of the following items is not excluded under Sec.911?

A taxpayer may make the election to either deduct or take a credit for foreign income taxes

Identify which of the following statements is true.

Identify which of the following statements is true.

Compare the U.S.tax treatment of a nonresident alien and a resident alien,both of whom earn U.S.trade or business and U.S.investment income.

U.S.citizen Patrick is a bona fide resident of a foreign country for all of the current year.Patrick uses a calendar year as his tax year.He has $100,000 of self-employment income and incurs $20,000 in housing expenses.The base housing cost amount is $15,616.The deduction for housing expenses is

Excess foreign tax credits can be carried back one year and forward five years.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Filters

Exam 16: Ustaxation of Foreign-Related Transactions

A nonresident alien cannot

U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation

A foreign corporation with a single class of stock is owned 8% by Bert,49% by Xi Yong,30% by Ernie,and 13% by Mark.Bert,Ernie,and Mark are U.S.citizens,and Xi Yong is a nonresident alien.Bert is Ernie's son.Is the foreign corporation a controlled foreign corporation (CFC)?

Overseas business activities conducted by U.S.corporations receive which one of the following favorable tax breaks?

Which of the following is an advantage of conducting foreign operations through a branch?

Excess foreign taxes in one basket cannot offset limitation amounts in another basket.

What are the consequences of classification as a corporate inversion?

Perry,a U.S.citizen,is transferred by his employer to Japan for a three-year assignment.Which one of the following items is not excluded under Sec.911?

A taxpayer may make the election to either deduct or take a credit for foreign income taxes

Identify which of the following statements is true.

Identify which of the following statements is true.

Compare the U.S.tax treatment of a nonresident alien and a resident alien,both of whom earn U.S.trade or business and U.S.investment income.

U.S.citizen Patrick is a bona fide resident of a foreign country for all of the current year.Patrick uses a calendar year as his tax year.He has $100,000 of self-employment income and incurs $20,000 in housing expenses.The base housing cost amount is $15,616.The deduction for housing expenses is

Excess foreign tax credits can be carried back one year and forward five years.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Filters