Question 1

Identify which of the following statements is true.

Accepted Answer

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

Question 2

Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?

Accepted Answer

A) the taxpayer's country of citizenship 
B) the taxpayer's country of residence 
C) the taxpayer's type of business 
D) the type of income earned 
A) the taxpayer's country of citizenship 
B) the taxpayer's country of residence 
C) the taxpayer's type of business 
D) the type of income earned

Question 3

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

Question 4

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 5

Identify which of the following statements is true.

Accepted Answer

A) The losses of a foreign corporation that is 100% owned by a domestic corporation can be deducted by the domestic corporation to offset its gross income in the year incurred. 
B) The deemed paid foreign tax credit was enacted so as not to discourage foreign direct investment through foreign branches. 
C) A dividend remittance made by a noncontrolled foreign corporation is translated into U.S.dollars at the current exchange rate for the date the dividend is paid. 
D) All of the above are false. 
A) The losses of a foreign corporation that is 100% owned by a domestic corporation can be deducted by the domestic corporation to offset its gross income in the year incurred. 
B) The deemed paid foreign tax credit was enacted so as not to discourage foreign direct investment through foreign branches. 
C) A dividend remittance made by a noncontrolled foreign corporation is translated into U.S.dollars at the current exchange rate for the date the dividend is paid. 
D) All of the above are false.

Question 6

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 7

Identify which of the following statements is true.

Accepted Answer

A) 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. 
B) Nonresident aliens and foreign corporations are not subject to U.S.taxation on their non-U.S.source investment income and part or all of their non-U.S.source trade or business income. 
C) In a particular year,the overall foreign tax credit limitation permits a taxpayer to offset "excess" foreign taxes paid in one country against "excess" limitation amounts originating in other countries. 
D) All of the above are true. 
A) 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. 
B) Nonresident aliens and foreign corporations are not subject to U.S.taxation on their non-U.S.source investment income and part or all of their non-U.S.source trade or business income. 
C) In a particular year,the overall foreign tax credit limitation permits a taxpayer to offset "excess" foreign taxes paid in one country against "excess" limitation amounts originating in other countries. 
D) All of the above are true.

Question 8

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

Accepted Answer

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

Question 9

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

Accepted Answer

The branch profits tax is imposed on the

Question 10

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

Accepted Answer

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

Question 11

Identify which of the following statements is true.

Accepted Answer

A) For a foreign corporation to be a controlled foreign corporation (CF
C) ,more than 40% of its voting stock,or more than 40% of the value of its outstanding stock,must be owned by U.S.shareholders on any day of the corporation's tax year. 
B) 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. 
C) When a controlled foreign corporation (CF
C) earns Subpart F income,such income is considered to be a constructive distribution to the CFC's U.S.shareholders on the last day of the CFC's tax year,or the last day on which CFC status is retained. 
D) All of the above are true. 
A) For a foreign corporation to be a controlled foreign corporation (CF
C) ,more than 40% of its voting stock,or more than 40% of the value of its outstanding stock,must be owned by U.S.shareholders on any day of the corporation's tax year. 
B) 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. 
C) When a controlled foreign corporation (CF
C) earns Subpart F income,such income is considered to be a constructive distribution to the CFC's U.S.shareholders on the last day of the CFC's tax year,or the last day on which CFC status is retained. 
D) All of the above are true.

Question 12

Which of the following statements regarding inversions is incorrect?

Accepted Answer

A) The objective of an inversion is to avoid U.S.tax on worldwide income. 
B) In an inversion,a U.S.corporation reorganizes as a foreign corporation. 
C) The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock. 
D) The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid. 
A) The objective of an inversion is to avoid U.S.tax on worldwide income. 
B) In an inversion,a U.S.corporation reorganizes as a foreign corporation. 
C) The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock. 
D) The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid.

Question 13

U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $97,600 in 2013.

Accepted Answer

A) True 
 B)False

Question 14

A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a U.S.citizen.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

Accepted Answer

Yes,the foreign corporation is

Question 15

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 16

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

Accepted Answer

An annual election is available to indiv

Question 17

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

Question 18

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 have the same gross profit.Sixty percent of the widgets were sold through a Country Y wholesaler that is 100% owned by Phoenix,and are destined for use in Country Y.The remaining 40% are sold through unrelated Country X wholesalers and are destined for use in Country X.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 19

U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation

Accepted Answer

A) must include the $100,000 profit in its current-year U.S.tax return. 
B) never has to include Foreign Corporation's profits in its U.S.tax return. 
C) reports Foreign Corporation's profits in its U.S.tax return in the same manner it would if Foreign Corporation were instead a foreign branch. 
D) must include Foreign Corporation's profits in its U.S.tax return when they are paid to U.S.Corporation in the form of a dividend. 
A) must include the $100,000 profit in its current-year U.S.tax return. 
B) never has to include Foreign Corporation's profits in its U.S.tax return. 
C) reports Foreign Corporation's profits in its U.S.tax return in the same manner it would if Foreign Corporation were instead a foreign branch. 
D) must include Foreign Corporation's profits in its U.S.tax return when they are paid to U.S.Corporation in the form of a dividend.

Question 20

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?

Accepted Answer

•Is Stan Signowski eligible to claim the

Identify which of the following statements is true.

Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?

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.

Identify which of the following statements is true.

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

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

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

Identify which of the following statements is true.

Which of the following statements regarding inversions is incorrect?

U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $97,600 in 2013.

A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a U.S.citizen.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

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.

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

U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation

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

Identify which of the following statements is true.

Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?

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.

Identify which of the following statements is true.

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

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

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

Identify which of the following statements is true.

Which of the following statements regarding inversions is incorrect?

U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $97,600 in 2013.

A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a U.S.citizen.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

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.

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

U)S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation

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