Question 1

Which of the following statements is incorrect?

Accepted Answer

A)  U.S. taxpayers with a foreign branch can reduce part or all of their U.S. taxes by the foreign tax credit. 
B)  A foreign corporation's (less than 50% ownership) are not taxed until repatriated. 
C)  A domestic subsidiary's earnings are taxed in the year earned. 
D)  All of a controlled foreign corporation's earnings are taxed as earned. 
A)  U.S. taxpayers with a foreign branch can reduce part or all of their U.S. taxes by the foreign tax credit. 
B)  A foreign corporation's (less than 50% ownership) are not taxed until repatriated. 
C)  A domestic subsidiary's earnings are taxed in the year earned. 
D)  All of a controlled foreign corporation's earnings are taxed as earned.

Question 2

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)  The corporation will be subject to a flat 35% tax rate. 
C)  Foreign tax credits will be disallowed on all future earnings. 
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)  The corporation will be subject to a flat 35% tax rate. 
C)  Foreign tax credits will be disallowed on all future earnings. 
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 3

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.

Question 4

Identify which of the following statements is false.

Accepted Answer

A)  Nonresident aliens may use either the standard deduction or claim itemized deductions. 
B)  Nonresident aliens are generally allowed to claim only a single personal exemption. 
C)  A nonresident alien can elect to have income earned on a passive real estate investment treated as trade or business income. 
D)  All of the above are false. 
A)  Nonresident aliens may use either the standard deduction or claim itemized deductions. 
B)  Nonresident aliens are generally allowed to claim only a single personal exemption. 
C)  A nonresident alien can elect to have income earned on a passive real estate investment treated as trade or business income. 
D)  All of the above are false.

Question 5

Marcella, an alien individual, is present in the United States for 122 days this year and 122 days each in the past two years. Does she satisfy both the 31- day and 183- day requirements for U.S. Residency status?

Accepted Answer

Yes, 31- day test: 122 days th

Question 6

Discuss the use of a "tax haven" nation to reduce taxes and the effect of Subpart F rules on such planning.

Accepted Answer

A domestic manufacturing corporation for

Question 7

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 $75,000 of sales income earned while in the United States and $30,000 of non- U.S. sales income earned while he was outside the United States. How will the income be taxed and how will the tax be collected?

Accepted Answer

The $30,000 of non- U.S. sales commissio

Question 8

A foreign corporation is a CFC that is in its initial year of operation. For the current year, it reports $1 million of earnings and has an aggregate U.S. Property investment of $400,000. If none of the earnings qualified as Subpart F income, explain how the earnings are taxed.

Accepted Answer

By making the $400,000 investm

Question 9

U.S. citizens and resident aliens working abroad may qualify for the foreign- earned income exclusion of $103,900 in 2018.

Accepted Answer

A) True 
 B)False

Question 10

A nonresident alien earns $10,000 of dividends from a domestic corporation, which is the alien's only U.S. source income. Which one of the following statements is incorrect?

Accepted Answer

A)  The nonresident alien's U.S. tax rate is 30% unless reduced by a tax treaty. 
B)  The domestic corporation must withhold the U.S. taxes from the alien's dividend payment. 
C)  The nonresident alien must pay estimated taxes on the dividend income at a 30% rate. 
D)  The 30% tax rate is applied against gross income. 
A)  The nonresident alien's U.S. tax rate is 30% unless reduced by a tax treaty. 
B)  The domestic corporation must withhold the U.S. taxes from the alien's dividend payment. 
C)  The nonresident alien must pay estimated taxes on the dividend income at a 30% rate. 
D)  The 30% tax rate is applied against gross income.

Question 11

A nonresident alien cannot

Accepted Answer

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

Question 12

Income derived from the sale of merchandise inventory (i.e., final goods purchased for resale) are sourced in the country where the sale occurs.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the Sec. 482 rules concerning the sale of goods and services between a domestic parent corporation and a foreign subsidiary at a lower- than- normal price.

Accepted Answer

Section 482 is designed to prevent tax a

Question 14

Darlene, a U.S. citizen, has foreign- earned income of $150,000 and incurs $33,750 of foreign- earned income taxes. How much of Darlene's foreign income taxes are noncreditable?

Accepted Answer

[1 - ($103

Question 15

Identify which of the following statements is false.

Accepted Answer

A)  Taxable pensions and annuities are excluded from the definition of earned income when computing the foreign- earned income exclusion. 
B)  An individual meets the bona fide resident test by establishing a home in a foreign country for 330 days. 
C)  Earned income is excludable from gross income only if it is foreign- source income. 
D)  All of the above are false. 
A)  Taxable pensions and annuities are excluded from the definition of earned income when computing the foreign- earned income exclusion. 
B)  An individual meets the bona fide resident test by establishing a home in a foreign country for 330 days. 
C)  Earned income is excludable from gross income only if it is foreign- source income. 
D)  All of the above are false.

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

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

A)  The former U.S. company and its affiliates do not conduct substantial business in the foreign country of incorporation. 
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)  A foreign corporation acquires substantially all of the assets of a U.S. corporation. 
D)  All of the above are required. 
A)  The former U.S. company and its affiliates do not conduct substantial business in the foreign country of incorporation. 
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)  A foreign corporation acquires substantially all of the assets of a U.S. corporation. 
D)  All of the above are required.

Question 19

Prior to 2018, 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)  $230,000 
B)  $180,000 
C)  $150,000 
D)  none of the above 
A)  $230,000 
B)  $180,000 
C)  $150,000 
D)  none of the above

Question 20

Quality Corporation created a foreign subsidiary in Country C this year. The subsidiary receives components from Quality, assembles the components into a finished product using local labor, and sells them to unrelated wholesalers in Countries A, B, and C using its own sales force. The foreign subsidiary has paid no dividends to the parent this year. What tax issues should Quality's Director of Taxes consider with respect to these activities?

Accepted Answer

• Is the Country C corporation a control

Which of the following statements is incorrect?

What are the consequences of classification as a corporate inversion?

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)?

Identify which of the following statements is false.

Marcella, an alien individual, is present in the United States for 122 days this year and 122 days each in the past two years. Does she satisfy both the 31- day and 183- day requirements for U.S. Residency status?

Discuss the use of a "tax haven" nation to reduce taxes and the effect of Subpart F rules on such planning.

A foreign corporation is a CFC that is in its initial year of operation. For the current year, it reports $1 million of earnings and has an aggregate U.S. Property investment of $400,000. If none of the earnings qualified as Subpart F income, explain how the earnings are taxed.

U.S. citizens and resident aliens working abroad may qualify for the foreign- earned income exclusion of $103,900 in 2018.

A nonresident alien earns $10,000 of dividends from a domestic corporation, which is the alien's only U.S. source income. Which one of the following statements is incorrect?

A nonresident alien cannot

Income derived from the sale of merchandise inventory (i.e., final goods purchased for resale) are sourced in the country where the sale occurs.

Discuss the Sec. 482 rules concerning the sale of goods and services between a domestic parent corporation and a foreign subsidiary at a lower- than- normal price.

Darlene, a U.S. citizen, has foreign- earned income of $150,000 and incurs $33,750 of foreign- earned income taxes. How much of Darlene's foreign income taxes are noncreditable?

Identify which of the following statements is false.

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

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

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: U.S. Taxation of Foreign-Related Transactions

Which of the following statements is incorrect?

What are the consequences of classification as a corporate inversion?

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)?

Identify which of the following statements is false.

Marcella, an alien individual, is present in the United States for 122 days this year and 122 days each in the past two years. Does she satisfy both the 31- day and 183- day requirements for U.S. Residency status?

Discuss the use of a "tax haven" nation to reduce taxes and the effect of Subpart F rules on such planning.

A foreign corporation is a CFC that is in its initial year of operation. For the current year, it reports $1 million of earnings and has an aggregate U.S. Property investment of $400,000. If none of the earnings qualified as Subpart F income, explain how the earnings are taxed.

U.S. citizens and resident aliens working abroad may qualify for the foreign- earned income exclusion of $103,900 in 2018.

A nonresident alien earns $10,000 of dividends from a domestic corporation, which is the alien's only U.S. source income. Which one of the following statements is incorrect?

A nonresident alien cannot

Income derived from the sale of merchandise inventory (i.e., final goods purchased for resale) are sourced in the country where the sale occurs.

Discuss the Sec. 482 rules concerning the sale of goods and services between a domestic parent corporation and a foreign subsidiary at a lower- than- normal price.

Darlene, a U.S. citizen, has foreign- earned income of $150,000 and incurs $33,750 of foreign- earned income taxes. How much of Darlene's foreign income taxes are noncreditable?

Identify which of the following statements is false.

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

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

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