Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

Which of the following is required in order for a transaction to be considered a corporate inversion?

Accepted Answer

A) A foreign corporation acquires substantially all of the assets of a U.S.corporation. 
B) Former shareholders of the U.S.corporation own 80% or more of the stock in the foreign corporation by reason of their U.S.stock ownership. 
C) The former U.S.company and its affiliates do not conduct substantial business in the foreign country of incorporation. 
D) All of the above are required. 
A) A foreign corporation acquires substantially all of the assets of a U.S.corporation. 
B) Former shareholders of the U.S.corporation own 80% or more of the stock in the foreign corporation by reason of their U.S.stock ownership. 
C) The former U.S.company and its affiliates do not conduct substantial business in the foreign country of incorporation. 
D) All of the above are required.

Question 4

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 excess foreign tax credit? Assume he does not qualify for the foreign-earned income exclusion.

Accepted Answer

A) $0 
B) $5,682 
C) $8,000 
D) none of the above 
A) $0 
B) $5,682 
C) $8,000 
D) none of the above

Question 5

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 6

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 7

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 8

Jose,a U.S.citizen,has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?

Accepted Answer

@#IMG-DLM& ^a($50,000

Question 9

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 10

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 11

If foreign taxes on foreign income exceed U.S.taxes on foreign income,the excess foreign taxes are credited against U.S.taxes in the current year.

Accepted Answer

A) True 
 B)False

Question 12

Identify which of the following statements is true.

Accepted Answer

A) An individual who is physically present in a foreign country for 330 full days out of a 12-month period can claim the foreign-earned income exclusion only for the days in the 12-month period he/she is physically present in a foreign country. 
B) An individual,who is a bona fide resident of a foreign country for at least one full tax year,can claim the foreign-earned income exclusion for all days on which he/she is a resident of the foreign country and physically present in that country. 
C) Fringe benefits that are excluded from gross income under a Code Section other than Sec.911 reduce the annual dollar ceiling for the foreign income exclusion. 
D) All of the above are false. 
A) An individual who is physically present in a foreign country for 330 full days out of a 12-month period can claim the foreign-earned income exclusion only for the days in the 12-month period he/she is physically present in a foreign country. 
B) An individual,who is a bona fide resident of a foreign country for at least one full tax year,can claim the foreign-earned income exclusion for all days on which he/she is a resident of the foreign country and physically present in that country. 
C) Fringe benefits that are excluded from gross income under a Code Section other than Sec.911 reduce the annual dollar ceiling for the foreign income exclusion. 
D) All of the above are false.

Question 13

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 14

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-based 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 15

Income is "effectively connected" with the conduct of a U.S.business only if

Accepted Answer

A) the asset-use test is met. 
B) the business activities test is met. 
C) activities of the U.S.business are a material factor in the realization of the income. 
D) Either A,B,or C can be correct. 
A) the asset-use test is met. 
B) the business activities test is met. 
C) activities of the U.S.business are a material factor in the realization of the income. 
D) Either A,B,or C can be correct.

Question 16

In 2017,Phoenix Corporation is a controlled foreign corporation (CFC)incorporated in Country X.It is 100% owned by its U.S.parent corporation.Phoenix has $80,000 of taxable income from the sale of widgets that were purchased from their U.S.parent corporation.All widgets are intended for use or consumption within Country X and have the same gross profit.Sixty percent of the widgets were sold through a Country X wholesaler that is 100% owned by Phoenix,and 40% are sold through unrelated Country X wholesalers.What amount of profits will be constructively distributed as foreign-based company sales income to the U.S.parent company?

Accepted Answer

A) $0 
B) $32,000 
C) $48,000 
D) $80,000 
A) $0 
B) $32,000 
C) $48,000 
D) $80,000

Question 17

Identify which of the following statements is false.

Accepted Answer

A) The foreign-earned income exclusion is $104,100 in 2018. 
B) The primary purpose for the foreign-earned income exclusion is to prevent double taxation of income. 
C) A taxpayer who is physically present in a foreign country for 330 full days out of a 12-month period satisfies the bona fide foreign resident test. 
D) All of the above are false. 
A) The foreign-earned income exclusion is $104,100 in 2018. 
B) The primary purpose for the foreign-earned income exclusion is to prevent double taxation of income. 
C) A taxpayer who is physically present in a foreign country for 330 full days out of a 12-month period satisfies the bona fide foreign resident test. 
D) All of the above are false.

Question 18

What are the carryback and carryforward periods for the foreign tax credit?

Accepted Answer

A) back two years; forward five years 
B) back three years; forward ten years 
C) back one year; forward ten years 
D) back two years; forward twenty years 
A) back two years; forward five years 
B) back three years; forward ten years 
C) back one year; forward ten years 
D) back two years; forward twenty years

Question 19

Identify which of the following statements is true.

Accepted Answer

A) 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. 
B) Nonresident aliens and foreign corporations are not subject to U.S.taxation on their non-U.S.source investment income and part or all of their non-U.S.source trade or business income. 
C) In a particular year,the overall foreign tax credit limitation permits a taxpayer to offset "excess" foreign taxes paid in one country against "excess" limitation amounts originating in other countries. 
D) All of the above are true. 
A) 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. 
B) Nonresident aliens and foreign corporations are not subject to U.S.taxation on their non-U.S.source investment income and part or all of their non-U.S.source trade or business income. 
C) In a particular year,the overall foreign tax credit limitation permits a taxpayer to offset "excess" foreign taxes paid in one country against "excess" limitation amounts originating in other countries. 
D) All of the above are true.

Question 20

In 2017,Phoenix Corporation is a controlled foreign corporation (CFC)incorporated in Country X.It is 100% owned by its U.S parent corporation.Phoenix has $80,000 of taxable income from the sale of widgets that were purchased from their U.S.parent corporation.All widgets have the same gross profit.Sixty percent of the widgets were sold through a Country Y wholesaler that is 100% owned by Phoenix,and are destined for use in Country Y.The remaining 40% are sold through unrelated Country X wholesalers and are destined for use in Country X.What amount of profits will be constructively distributed as foreign-based company sales income to the U.S.parent company?

Accepted Answer

A) $0 
B) $32,000 
C) $48,000 
D) $80,000 
A) $0 
B) $32,000 
C) $48,000 
D) $80,000

Exam 16: U.S. Taxation of Foreign-Related Transactions

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

A nonresident alien cannot

Which of the following is required in order for a transaction to be considered a corporate inversion?

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.

Jose,a U.S.citizen,has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?

Identify which of the following statements is true.

If foreign taxes on foreign income exceed U.S.taxes on foreign income,the excess foreign taxes are credited against U.S.taxes in the current year.

Identify which of the following statements is true.

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.

Income is "effectively connected" with the conduct of a U.S.business only if

Identify which of the following statements is false.

What are the carryback and carryforward periods for the foreign tax credit?

Identify which of the following statements is true.

Tax Research

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