Question 1

What are the five major income categories that are taxed under the Subpart F rules? Explain the concept of Subpart F income.

Accepted Answer

1) Income from the insurance of U.S. and

Question 2

U.S. shareholders are not taxed on dividends paid by a foreign subsidiary as long as the earnings are not remitted to them as dividends.

Accepted Answer

A) True 
 B)False

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. The shareholders are not related. Is the foreign corporation a controlled foreign corporation (CFC)?

Accepted Answer

It is not a CFC (only 43% owne

Question 4

A foreign corporation is owned by five unrelated individuals. John, Sam, and David are U.S. citizens who own 30%, 18% and 9%, respectively, of the foreign corporation's single class of stock. Alberto and Manuel are nonresident aliens who own 37% and 6%, respectively, of the foreign corporation's stock. Which of the following statements is true?

Accepted Answer

A)  There are two "U.S. shareholders" and the foreign corporation is not a controlled foreign corporation (CF
C) . 
B)  There are three "U.S. shareholders" and the foreign corporation is not a controlled foreign corporation (CF
C) . 
C)  There are two "U.S. shareholders" and the foreign corporation is a controlled foreign corporation (CF
C) . 
D)  There are three "U.S. shareholders" and the foreign corporation is a controlled foreign corporation (CF
C) . 
A)  There are two "U.S. shareholders" and the foreign corporation is not a controlled foreign corporation (CF
C) . 
B)  There are three "U.S. shareholders" and the foreign corporation is not a controlled foreign corporation (CF
C) . 
C)  There are two "U.S. shareholders" and the foreign corporation is a controlled foreign corporation (CF
C) . 
D)  There are three "U.S. shareholders" and the foreign corporation is a controlled foreign corporation (CF
C) .

Question 5

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)  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. 
C)  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. 
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)  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. 
C)  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. 
D)  All of the above are correct.

Question 6

Identify which of the following statements is true.

Accepted Answer

A)  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. 
B)  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. 
C)  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. 
D)  All of the above are false. 
A)  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. 
B)  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. 
C)  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. 
D)  All of the above are false.

Question 7

What is the branch profits tax? Explain the Congressional intent behind its enactment.

Accepted Answer

The branch profits tax is imposed on the

Question 8

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

Question 9

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 10

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 11

Identify which of the following statements is true.

Accepted Answer

A)  A controlled foreign corporation (CF
C)  can avoid the constructive dividend distribution resulting from investments in U.S. property if it invests in U.S. government obligations. 
B)  Distributions made by a controlled foreign corporation (CF
C)  are deemed to be paid first from tax- deferred earnings. 
C)  When a controlled foreign corporation (CF
C)  uses Subpart F income to invest in U.S. property, the investments are characterized as constructive distributions. 
D)  All of the above are false. 
A)  A controlled foreign corporation (CF
C)  can avoid the constructive dividend distribution resulting from investments in U.S. property if it invests in U.S. government obligations. 
B)  Distributions made by a controlled foreign corporation (CF
C)  are deemed to be paid first from tax- deferred earnings. 
C)  When a controlled foreign corporation (CF
C)  uses Subpart F income to invest in U.S. property, the investments are characterized as constructive distributions. 
D)  All of the above are false.

Question 12

Identify which of the following statements is true.

Accepted Answer

A)  An individual who is a resident alien of the United States is taxed on his or her worldwide income at the same tax rates that would apply to a U.S. citizen. 
B)  If a foreign national has a closer connection with his home country, the individual is taxed as a resident alien. 
C)  To obtain resident status, an alien must meet both the lawful permanent resident test and the substantial presence test. 
D)  All of the above are false. 
A)  An individual who is a resident alien of the United States is taxed on his or her worldwide income at the same tax rates that would apply to a U.S. citizen. 
B)  If a foreign national has a closer connection with his home country, the individual is taxed as a resident alien. 
C)  To obtain resident status, an alien must meet both the lawful permanent resident test and the substantial presence test. 
D)  All of the above are false.

Question 13

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 14

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

Accepted Answer

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

Question 15

Nonresident aliens are not allowed to claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 16

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 on the last day of the tax year and both spouses consent.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

Guinness Corporation, a U.S. corporation, began operating overseas in the current year. This year, Guinness sold machine tools that it manufactured in the United States to Canadian companies from a branch office located in Toronto, purchased a 40% investment in a Brazilian corporation from which it received a dividend, and received royalties from an English firm that is the licensee of machine tool patents held by Guinness. The English firm uses the patents to manufacturer machine tools it sells in England. What international tax issues should Guinness's Director of Taxes consider with respect to these activities?

Accepted Answer

• Does Guinness Corporation have to reco

Question 19

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

Accepted Answer

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

Question 20

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 $

What are the five major income categories that are taxed under the Subpart F rules? Explain the concept of Subpart F income.

U.S. shareholders are not taxed on dividends paid by a foreign subsidiary as long as the earnings are not remitted to them as dividends.

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. The shareholders are not related. 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?

Identify which of the following statements is true.

What is the branch profits tax? Explain the Congressional intent behind its enactment.

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.

Identify which of the following statements is true.

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

Nonresident aliens are not allowed to claim the standard deduction.

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 on the last day of the tax year and both spouses consent.

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

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

What are the five major income categories that are taxed under the Subpart F rules? Explain the concept of Subpart F income.

U.S. shareholders are not taxed on dividends paid by a foreign subsidiary as long as the earnings are not remitted to them as dividends.

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. The shareholders are not related. 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?

Identify which of the following statements is true.

What is the branch profits tax? Explain the Congressional intent behind its enactment.

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.

Identify which of the following statements is true.

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

Nonresident aliens are not allowed to claim the standard deduction.

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 on the last day of the tax year and both spouses consent.

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

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