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

Identify which of the following statements is true. A) 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. B) When a controlled foreign corporation (CFC) 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. C) For a foreign corporation to be a controlled foreign corporation (CFC), 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. D) All of the above are true.

Free

(Essay)

4.8/5

(42)

Question 1

Correct Answer:

Verified

A taxpayer who is physically present in a foreign country for 330 full days out of a 12- month period and maintains a tax home there has satisfied the bona fide foreign resident test.

Free

(True/False)

4.8/5

(30)

Question 2

Correct Answer:

Verified

True

In January of the current year, Stan Signowski's U.S. employer assigned him to their Paris office. This year, he earned salary, a cost- of- living allowance, a housing allowance, a home leave allowance that permits him to return home once each year, and an education allowance to pay for U.S. schooling for his son. Stan and his wife, Jennifer, have rented an apartment in Paris and paid French income taxes. What tax issues does Stan need to consider when preparing his tax return?

Free

(Essay)

4.8/5

(40)

Question 3

Correct Answer:

Verified

the Sec. 911 limitation (calculated on a daily basis). In addition, Stan can claim an exclusion for the housing cost amount minus the base amount (calculated on a daily basis). Both exclusions are denied for the portion of Stan's salary and allowances attributable to his time in the United States. The portion of his employment- related expenses and foreign taxes attributable to the excluded income are unable to be deducted or credited. The foreign- earned income exclusion and housing cost amount exclusion are both elected by claiming such amounts on Form 2555.
Not knowing the amount of the foreign income taxes, and other components of Stan's tax return, it is impo to know whether Stan should elect out of the Sec. 911 exclusion. Stan may have spent a sufficient number in the United States on his trip home to need to qualify for the foreign- earned income exclusion under the bona fide foreign resident rules. In such case, he will not qualify for the exclusion until the end of this second calendar year in France. The exclusion would then be available retroactively back to the date on which he established foreign residency status.

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?

(Multiple Choice)

4.8/5

(31)

Question 4

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.

(Essay)

4.7/5

(30)

Question 5

Identify which of the following statements is true.

(Multiple Choice)

4.7/5

(35)

Question 6

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 $30,000 of dividend income paid by a U.S. corporation on a stock investment portfolio unrelated to his trade or business. How will the dividend be taxed and how will the tax be collected?

(Essay)

4.7/5

(31)

Question 7

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.

(True/False)

4.7/5

(27)

Question 8

Identify which of the following statements is true.

(Multiple Choice)

4.7/5

(30)

Question 9

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?

(Multiple Choice)

4.8/5

(42)

Question 10

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

(Multiple Choice)

4.8/5

(30)

Question 11

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

(Multiple Choice)

4.8/5

(41)

Question 12

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.

(Multiple Choice)

4.9/5

(30)

Question 13

Identify which of the following statements is true.

(Multiple Choice)

4.8/5

(35)

Question 14

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

(Multiple Choice)

4.7/5

(29)

Question 15

U.S. citizen who has a calendar tax year establishes a tax home and residence in a foreign country and qualifies for the foreign- earned income exclusion for 60 days in 2016; 365 days in 2017; and 60 days in 2018. The maximum earned income exclusion for 2018 rounded to the nearest whole number is?

(Multiple Choice)

4.8/5

(37)

Question 16

Identify which of the following statements is false.

(Multiple Choice)

4.8/5

(43)

Question 17

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

(Multiple Choice)

4.9/5

(38)

Question 18

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 country and $1,800 of interest income earned on a bank account located in Addison, Illinois. How will the interest be taxed and how will the tax be collected?

(Essay)

4.8/5

(39)

Question 19

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?

(Essay)

4.9/5

(42)

Question 20

Showing 1 - 20 of 86

A taxpayer who is physically present in a foreign country for 330 full days out of a 12- month period and maintains a tax home there has satisfied the bona fide foreign resident test.

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?

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.

Identify which of the following statements is true.

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.

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

Identify which of the following statements is true.

U.S. citizen who has a calendar tax year establishes a tax home and residence in a foreign country and qualifies for the foreign- earned income exclusion for 60 days in 2016; 365 days in 2017; and 60 days in 2018. The maximum earned income exclusion for 2018 rounded to the nearest whole number is?

Identify which of the following statements is false.

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

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?

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