Question 1

U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $101,300 in 2016.

Accepted Answer

A) True 
 B)False

Question 2

For the foreign credit limitation calculation,income derived from the sale of inventory which is produced by the seller,is considered earned

Accepted Answer

A) where production occurs. 
B) where the sale occurs. 
C) where the seller is a resident. 
D) partially where produced and partially where sold. 
A) where production occurs. 
B) where the sale occurs. 
C) where the seller is a resident. 
D) partially where produced and partially where sold.

Question 3

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 $

Question 4

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?

Accepted Answer

The United States taxes the dividend inc

Question 5

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 6

A U.S.corporation can claim a credit for foreign taxes withheld from dividends paid by a foreign corporation in which it owns at least 10% of the stock.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) last year. 
B) the current year. 
C) next year. 
D) The earned income exclusion cannot be claimed. 
A) last year. 
B) the current year. 
C) next year. 
D) The earned income exclusion cannot be claimed.

Question 8

Identify which of the following statements is true.

Accepted Answer

A) Foreign-based company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CF
C) from its U.S.parent corporation and is sold to unrelated persons in Country Z. 
B) Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length. 
C) One tax avoidance practice which Sec.482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's-length price that would be used by unrelated parties. 
D) All of the above are true. 
A) Foreign-based company sales income is earned when personal property is purchased by a Country X controlled foreign corporation (CF
C) from its U.S.parent corporation and is sold to unrelated persons in Country Z. 
B) Section 482 permits the IRS to restructure transactions between related parties as if the transactions were conducted at arm's length. 
C) One tax avoidance practice which Sec.482 attempts to prevent is the transfer of tangible property to a foreign subsidiary at a price which is below the arm's-length price that would be used by unrelated parties. 
D) All of the above are true.

Question 9

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

Accepted Answer

A) presence in one foreign country for at least 330 full days during a 12-month period. 
B) presence in one or more foreign countries for at least 330 full days during a single tax year. 
C) presence in one or more foreign countries for at least 330 full days during a 12-month period. 
D) presence in one or more foreign countries for at least 330 consecutive full days during a 12-month period. 
A) presence in one foreign country for at least 330 full days during a 12-month period. 
B) presence in one or more foreign countries for at least 330 full days during a single tax year. 
C) presence in one or more foreign countries for at least 330 full days during a 12-month period. 
D) presence in one or more foreign countries for at least 330 consecutive full days during a 12-month period.

Question 10

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 11

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.

Accepted Answer

A) True 
 B)False

Question 12

Identify which of the following statements is false.

Accepted Answer

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

Question 13

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

Question 14

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 15

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 16

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 2010; 365 days in 2011; and 60 days this year,2012.The maximum earned income exclusion for this year is?

Accepted Answer

A) $13,733 
B) $16,044 
C) $13,151 
D) none of the above 
A) $13,733 
B) $16,044 
C) $13,151 
D) none of the above

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

Identify which of the following statements is true.

Accepted Answer

A) Capital gains earned in the United States,other than in the conduct of a U.S.trade or business,are taxed to a nonresident alien only if the alien is physically present in the United States for at least 183 days during the tax year. 
B) Aliens,who are U.S.residents,are taxed only on their U.S.income. 
C) A nonresident alien from a nontreaty country is taxed at a 35% rate on U.S.source investment income without the benefit of any deductions. 
D) All of the above are true. 
A) Capital gains earned in the United States,other than in the conduct of a U.S.trade or business,are taxed to a nonresident alien only if the alien is physically present in the United States for at least 183 days during the tax year. 
B) Aliens,who are U.S.residents,are taxed only on their U.S.income. 
C) A nonresident alien from a nontreaty country is taxed at a 35% rate on U.S.source investment income without the benefit of any deductions. 
D) All of the above are true.

Question 19

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 30% tax rate is applied against gross income. 
D) The nonresident alien must pay estimated taxes on the dividend income at a 30% rate. 
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 30% tax rate is applied against gross income. 
D) The nonresident alien must pay estimated taxes on the dividend income at a 30% rate.

Question 20

Nonresident aliens are not allowed to claim the standard deduction.

Accepted Answer

A) True 
 B)False

Exam 16: Ustaxation of Foreign-Related Transactions

U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $101,300 in 2016.

For the foreign credit limitation calculation,income derived from the sale of inventory which is produced by the seller,is considered earned

A U.S.corporation can claim a credit for foreign taxes withheld from dividends paid by a foreign corporation in which it owns at least 10% of the stock.

Identify which of the following statements is true.

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.

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.

Identify which of the following statements is false.

Overseas business activities conducted by U.S.corporations receive which one of the following favorable tax breaks?

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.

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 2010; 365 days in 2011; and 60 days this year,2012.The maximum earned income exclusion for this year is?

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.

Identify which of the following statements is true.

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?

Nonresident aliens are not allowed to claim the standard deduction.

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