Exam 16: Us Taxation of Foreign-Related Transactions

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)?

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. citizen Barry is a bona fide resident of a foreign country for all of 2020. Barry uses a calendar year as his tax year and receives $158,000 in salary and allowances from his employer. Included in the $158,000 is a $25,000 housing allowance. Barry's housing costs are $30,000. The base housing amount for the current year is $17,216. What amount related to his housing can Barry exclude on his Form 2555?

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.

Identify which of the following statements is true.

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

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?

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

Corporate taxpayers claim the credit on Form 1116.

What are the consequences of classification as a corporate inversion?

Identify which of the following statements is true.

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

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 two baskets are needed for the two types of income because the interest is passive income, Karen's foreign tax credit that can be claimed is

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?

U.S. citizen Patrick is a bona fide resident of a foreign country for all of the current year. Patrick uses a calendar year as his tax year. He has $100,000 of self-employment income and incurs $20,000 in housing expenses. The base housing cost amount is $17,216. The deduction for housing expenses is

Explain the alternatives available to individual taxpayers for reporting foreign income taxes that have been paid or accrued.

The physical presence test method of qualifying for the foreign-earned income exclusion requires the

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

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?