Question 1

Which of the following statements is incorrect?

Accepted Answer

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

Question 2

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 3

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 4

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 5

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 6

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-base company sales income to the U.S.parent company?

Accepted Answer

A) $0 
B) $32,000 
C) $48,000 
D) $80,000 
A) $0 
B) $32,000 
C) $48,000 
D) $80,000

Question 7

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 8

Darlene,a U.S.citizen,has foreign-earned income of $150,000 and employment-related expenses of $15,000.Darlene earns no other income.Darlene also has $12,000 of itemized deductions not directly related to the foreign-earned income.She can exclude $97,600 of foreign-earned income.Darlene incurs $33,750 of Country C income taxes on $150,000 of Country C taxable income.How much of Darlene's foreign income taxes are noncreditable?

Accepted Answer

[1 - ($97,600 - $9,7

Question 9

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 10

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 11

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 12

Identify which of the following statements is true.

Accepted Answer

A) If a foreign national has a closer connection with his home country,the individual is taxed as a resident alien. 
B) To obtain resident status,an alien must meet both the lawful permanent resident test and the substantial presence test. 
C) 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. 
D) All of the above are false. 
A) If a foreign national has a closer connection with his home country,the individual is taxed as a resident alien. 
B) To obtain resident status,an alien must meet both the lawful permanent resident test and the substantial presence test. 
C) 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. 
D) All of the above are false.

Question 13

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?

Accepted Answer

A) base salary 
B) cost-of-living allowance 
C) housing costs 
D) premiums paid on first $50,000 of group term life insurance 
A) base salary 
B) cost-of-living allowance 
C) housing costs 
D) premiums paid on first $50,000 of group term life insurance

Question 14

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 15

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 16

Identify which of the following statements is true.

Accepted Answer

A) Foreign-base 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-base 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 17

Cane Corporation owns 45% of the stock of Edmonton Airline Corporation.In its first year of operations,Edmonton Airline,a Canadian corporation,earns $400,000 of E&P and pays a $100,000 dividend to Cane Corporation.Edmonton Airline pays $50,000 in Canadian income taxes.All amounts are expressed in U.S.dollars.What is Cane Corporation's deemed paid foreign tax credit for the dividend?

Accepted Answer

A) $ 0 
B) $12,500 
C) $50,000 
D) none of the above 
A) $ 0 
B) $12,500 
C) $50,000 
D) none of the above

Question 18

Julia,an accrual-method taxpayer,is a U.S.citizen and a resident of a foreign country.Her tax year for both countries is a calendar year.Julia accrues 50,000 coras for the foreign country tax liability on December 31 of last year when the exchange rate is one cora = $1.Julia pays the tax to the foreign country on its due date,March 1 of the current year.The exchange rate on that date is one cora = $1.50.Julia files her U.S.tax return for last year on April 15 of the current year when the exchange rate is one cora = $2.Julia's foreign tax credit is

Accepted Answer

A) $50,000. 
B) $75,000. 
C) $100,000. 
D) none of the above 
A) $50,000. 
B) $75,000. 
C) $100,000. 
D) none of the above

Question 19

U.S.Corporation owns 45% of the stock of Foreign Corporation.Foreign Corporation is incorporated in Country T.In its first year of operations,Foreign Corporation earns 100,000 frugs of E&P,pays a 20,000- frug dividend to U.S.Corporation,and pays 5,000 frugs in income taxes.The exchange rate between the dollar and the frug is: first year average,1 frug = $0.20;yearend,1 frug = $0.25);tax payment date,1 frug = $0.30;and dividend payment date,1 frug = $0.28.What is the translated foreign tax amount attributable to the dividend for deemed paid foreign tax credit purposes?

Accepted Answer

A) $200.00 
B) $250.00 
C) $300.00 
D) $280.00 
A) $200.00 
B) $250.00 
C) $300.00 
D) $280.00

Question 20

Excess foreign taxes in one basket cannot offset limitation amounts in another basket.

Accepted Answer

A) True 
 B)False

Which of the following statements is incorrect?

Identify which of the following statements is false.

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 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.

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

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)?

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

Identify which of the following statements is true.

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 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.

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.

Excess foreign taxes in one basket cannot offset limitation amounts in another basket.

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

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Filters

Exam 16: Us Taxation of Foreign-Related Transactions

Which of the following statements is incorrect?

Identify which of the following statements is false.

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 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.

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

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)?

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

Identify which of the following statements is true.

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 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.

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.

Excess foreign taxes in one basket cannot offset limitation amounts in another basket.

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

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Filters