Question 1

Identify which of the following statements is true.

Accepted Answer

A) When a cash-basis taxpayer elects to take a credit for accrued foreign income taxes,certain other income and expense items must likewise be accrued. 
B) The taxpayer may revoke an election to exclude foreign-source earned income if a loss is incurred from foreign employment. 
C) A nonresident alien can elect to be considered a resident alien if the nonresident alien is married to a U.S.citizen or a resident alien sometime during the tax year and both spouses consent. 
D) All of the above are true. 
A) When a cash-basis taxpayer elects to take a credit for accrued foreign income taxes,certain other income and expense items must likewise be accrued. 
B) The taxpayer may revoke an election to exclude foreign-source earned income if a loss is incurred from foreign employment. 
C) A nonresident alien can elect to be considered a resident alien if the nonresident alien is married to a U.S.citizen or a resident alien sometime during the tax year and both spouses consent. 
D) All of the above are true.

Question 2

Identify which of the following statements is true.

Accepted Answer

A) The foreign income taxes withheld from a dividend remittance made by a foreign corporation are translated into U.S.dollars at the current exchange rate in effect for the date the dividend is paid. 
B) A U.S.subsidiary that is used by a foreign parent corporation to conduct its U.S.business activities is required to withhold 30% of dividends paid to the foreign corporation unless a treaty provides for a lower withholding rate. 
C) A foreign corporation that conducts a U.S.trade or business may be required to pay the corporate income tax,the corporate alternative minimum tax,and the branch profits in a single year. 
D) All of the above are false. 
A) The foreign income taxes withheld from a dividend remittance made by a foreign corporation are translated into U.S.dollars at the current exchange rate in effect for the date the dividend is paid. 
B) A U.S.subsidiary that is used by a foreign parent corporation to conduct its U.S.business activities is required to withhold 30% of dividends paid to the foreign corporation unless a treaty provides for a lower withholding rate. 
C) A foreign corporation that conducts a U.S.trade or business may be required to pay the corporate income tax,the corporate alternative minimum tax,and the branch profits in a single year. 
D) All of the above are false.

Question 3

Which of the following statements regarding inversions is incorrect?

Accepted Answer

A) The objective of an inversion is to avoid U.S.tax on worldwide income. 
B) In an inversion,a U.S.corporation reorganizes as a foreign corporation. 
C) The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock. 
D) The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid. 
A) The objective of an inversion is to avoid U.S.tax on worldwide income. 
B) In an inversion,a U.S.corporation reorganizes as a foreign corporation. 
C) The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock. 
D) The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid.

Question 4

A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a nonresident alien.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

Accepted Answer

Non-CFC (only 50% ow

Question 5

Bell Corporation,a domestic corporation,sells jars to its wholly owned foreign subsidiary,Jam.Jam Corporation is incorporated in and pays taxes to Country J.Bell Corporation normally sells jars to a U.S.wholesaler providing services similar to those provided by Jam at a price of $4 per unit.Both wholesalers incur similar costs.If Bell Corporation sells jars to Jam for $3 per unit,what are the tax effects?

Accepted Answer

Bell Corporation's profits increase by $

Question 6

Karen,a U.S.citizen,earns $40,000 of taxable income from U.S.sources,$20,000 in taxable wages from Country A and $20,000 in taxable interest from Country B.The U.S.tax rate is 25%.The tax on Country A income is $8,000,and Country B charges no tax on the interest income.Assuming only a single basket is required,Karen's foreign tax credit that can be claimed is

Accepted Answer

A) $5,000. 
B) $8,000. 
C) $10,000. 
D) none of the above 
A) $5,000. 
B) $8,000. 
C) $10,000. 
D) none of the above

Question 7

Darlene,a U.S.citizen,has foreign-earned income of $150,000 and employment-related expenses of $15,000.Darlene earns no other income.Darlene also has $12,000 of itemized deductions not directly related to the foreign-earned income.She can exclude $97,600 of foreign-earned income.Darlene incurs $33,750 of Country C income taxes on $150,000 of Country C taxable income.How much of Darlene's foreign income taxes are noncreditable?

Accepted Answer

[1 - ($97,600 - $9,7

Question 8

A U.S.corporation can claim a credit for foreign taxes withheld from dividends paid by a foreign corporation in which it owns at least 10% of the stock.

Accepted Answer

A) True 
 B)False

Question 9

U)S.Corporation owns 45% of the stock of Foreign Corporation.Foreign Corporation is incorporated in France.During the current year,Foreign Corporation reports $100,000 of E&P,pays $30,000 in foreign income taxes,and remits $40,000 of dividends ratably to its shareholders.In prior post-1986 tax years,Foreign Corporation reported $60,000 of E&P,paid foreign income taxes of $20,000,and paid no dividends.What is U.S.Corporation's deemed paid foreign tax credit for the current-year dividend?

Accepted Answer

A) $5,000 
B) $5,625 
C) $18,000 
D) $22,000 
A) $5,000 
B) $5,625 
C) $18,000 
D) $22,000

Question 10

Music Corporation is a CFC incorporated in Country M.Music receives interest and dividends from its two foreign subsidiary corporations,Sharp Corporation and Flat Corporation.Sharp is incorporated in Country S and conducts all of its activities in that country.Flat is incorporated in Country M and conducts all of its activities in that country.Are the interest and dividends received by Music Corporation FPHCI?

Accepted Answer

Only the dividends and interes

Question 11

Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?

Accepted Answer

A) the taxpayer's country of citizenship 
B) the taxpayer's country of residence 
C) the taxpayer's type of business 
D) the type of income earned 
A) the taxpayer's country of citizenship 
B) the taxpayer's country of residence 
C) the taxpayer's type of business 
D) the type of income earned

Question 12

A U.S.citizen,who uses a calendar year as his tax year,is transferred to a foreign country by his employer.The U.S.citizen arrived in the foreign country on November 3 of last year.Residency is expected to be maintained in the foreign country until August 4 of next year.None of the years are a leap year.The first year for which an earned income exclusion can be claimed is

Accepted Answer

A) last year. 
B) the current year. 
C) next year. 
D) The earned income exclusion cannot be claimed. 
A) last year. 
B) the current year. 
C) next year. 
D) The earned income exclusion cannot be claimed.

Question 13

A U.S.citizen accrued $120,000 of creditable foreign taxes last year.The citizen's foreign tax credit limitation for last year is $90,000 (only a single limitation need be calculated).The excess foreign tax credit limitation for the year preceding the year in which the excess foreign taxes were incurred is $2,000.A similar $2,000 excess foreign tax credit limitation position is expected in each of the next 10 years.What portion of the excess foreign taxes can be expected to be noncreditable because of the foreign tax credit limitation?

Accepted Answer

A) $0 
B) $2,000 
C) $8,000 
D) none of the above 
A) $0 
B) $2,000 
C) $8,000 
D) none of the above

Question 14

Under the Subpart F rules,controlled foreign corporations (CFCs)are required to distribute a certain portion of their income as dividends to their U.S.shareholders.

Accepted Answer

A) True 
 B)False

Question 15

Identify which of the following statements is true.

Accepted Answer

A) For a foreign corporation to be a controlled foreign corporation (CF
C) ,more than 40% of its voting stock,or more than 40% of the value of its outstanding stock,must be owned by U.S.shareholders on any day of the corporation's tax year. 
B) Under the Subpart F rules,controlled foreign corporations (CFCs)are required to distribute a certain portion of their income as dividends to their U.S.shareholders. 
C) When a controlled foreign corporation (CF
C) earns Subpart F income,such income is considered to be a constructive distribution to the CFC's U.S.shareholders on the last day of the CFC's tax year,or the last day on which CFC status is retained. 
D) All of the above are true. 
A) For a foreign corporation to be a controlled foreign corporation (CF
C) ,more than 40% of its voting stock,or more than 40% of the value of its outstanding stock,must be owned by U.S.shareholders on any day of the corporation's tax year. 
B) Under the Subpart F rules,controlled foreign corporations (CFCs)are required to distribute a certain portion of their income as dividends to their U.S.shareholders. 
C) When a controlled foreign corporation (CF
C) earns Subpart F income,such income is considered to be a constructive distribution to the CFC's U.S.shareholders on the last day of the CFC's tax year,or the last day on which CFC status is retained. 
D) All of the above are true.

Question 16

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 U.S.taxes on her worldwide income are $20,000.What is Ashley's excess foreign tax credit? Assume she does not qualify for the foreign-earned income exclusion.

Accepted Answer

A) $0 
B) $2,000 
C) $4,000 
D) none of the above 
A) $0 
B) $2,000 
C) $4,000 
D) none of the above

Question 17

U.S.citizens,resident aliens,and domestic corporations are taxed by the U.S.government on their worldwide income at regular U.S.tax rates.

Accepted Answer

A) True 
 B)False

Question 18

Alan,a U.S.citizen,works in Germany and earns $70,000,paying $20,000 in German taxes.His U.S.income is $40,000 and he pays $8,000 in U.S.taxes.His U.S.taxes on his worldwide income are $22,500.What is Alan's foreign tax credit? Assume he does not qualify for the foreign-earned income exclusion.

Accepted Answer

A) $12,000 
B) $14,318 
C) $20,000 
D) none of the above 
A) $12,000 
B) $14,318 
C) $20,000 
D) none of the above

Question 19

Michael,a U.S.citizen,earned $100,000 of foreign-earned income and no other U.S.or foreign income in 2013.He also incurred $10,000 of employment-related expenses,none of which were reimbursed.If the full foreign-earned income exclusion is utilized,calculate the deductible employment-related expense (before the 2% nondeductible floor).

Accepted Answer

$10,000 × ($97,600/$100,000)=

Question 20

Nonresident aliens are not allowed to claim the standard deduction.

Accepted Answer

A) True 
 B)False

Identify which of the following statements is true.

Identify which of the following statements is true.

Which of the following statements regarding inversions is incorrect?

A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a nonresident alien.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

A U.S.corporation can claim a credit for foreign taxes withheld from dividends paid by a foreign corporation in which it owns at least 10% of the stock.

Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?

Under the Subpart F rules,controlled foreign corporations (CFCs)are required to distribute a certain portion of their income as dividends to their U.S.shareholders.

Identify which of the following statements is true.

U.S.citizens,resident aliens,and domestic corporations are taxed by the U.S.government on their worldwide income at regular U.S.tax rates.

Alan,a U.S.citizen,works in Germany and earns $70,000,paying $20,000 in German taxes.His U.S.income is $40,000 and he pays $8,000 in U.S.taxes.His U.S.taxes on his worldwide income are $22,500.What is Alan's foreign tax credit? Assume he does not qualify for the foreign-earned income exclusion.

Nonresident aliens are not allowed to claim the standard deduction.

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

Identify which of the following statements is true.

Identify which of the following statements is true.

Which of the following statements regarding inversions is incorrect?

A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a nonresident alien.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

A U.S.corporation can claim a credit for foreign taxes withheld from dividends paid by a foreign corporation in which it owns at least 10% of the stock.

Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?

Under the Subpart F rules,controlled foreign corporations (CFCs)are required to distribute a certain portion of their income as dividends to their U.S.shareholders.

Identify which of the following statements is true.

U.S.citizens,resident aliens,and domestic corporations are taxed by the U.S.government on their worldwide income at regular U.S.tax rates.

Alan,a U.S.citizen,works in Germany and earns $70,000,paying $20,000 in German taxes.His U.S.income is $40,000 and he pays $8,000 in U.S.taxes.His U.S.taxes on his worldwide income are $22,500.What is Alan's foreign tax credit? Assume he does not qualify for the foreign-earned income exclusion.

Nonresident aliens are not allowed to claim the standard deduction.

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