Question 1

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  True

Question 2

Excess foreign tax credits can be carried back one year and forward five years.

Accepted Answer

A) True 
 B)False  False

Question 3

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. A

Question 4

Discuss the Sec.482 rules concerning the sale of goods and services between a domestic parent corporation and a foreign subsidiary at a lower-than-normal price.

Accepted Answer

Section 482 is designed to prevent tax a

Question 5

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 6

Identify which of the following statements is true.

Accepted Answer

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

Question 7

U.S.Corporation, a domestic corporation, owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year, Foreign Corporation suffers a $100,000 net operating loss (NOL)in France.What amount of the $100,000 NOL can U.S.Corporation use to reduce its current-year U.S.taxable income?

Accepted Answer

A)  $100,000 
B)  $50,000 
C)  $0 
D)  none of the above 
A)  $100,000 
B)  $50,000 
C)  $0 
D)  none of the above

Question 8

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 9

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 10

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 11

Identify which of the following statements is false.

Accepted Answer

A)  An accrual-basis taxpayer must make an adjustment to their foreign tax credit which reflects the change in exchange rates between the accrual date and the payment date. 
B)  Dividend income received by a U.S. individual from a foreign corporation earning nearly all of its income from outside the United States is foreign-source income. 
C)  Income from the sale of personal property (other than inventory) by a U.S. resident is considered earned in the country where the personal property is delivered. 
D)  Itemized deductions are allocated between U.S. and foreign-source income. 
A)  An accrual-basis taxpayer must make an adjustment to their foreign tax credit which reflects the change in exchange rates between the accrual date and the payment date. 
B)  Dividend income received by a U.S. individual from a foreign corporation earning nearly all of its income from outside the United States is foreign-source income. 
C)  Income from the sale of personal property (other than inventory) by a U.S. resident is considered earned in the country where the personal property is delivered. 
D)  Itemized deductions are allocated between U.S. and foreign-source income.

Question 12

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 13

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 14

Quality Corporation created a foreign subsidiary in Country C this year.The subsidiary receives components from Quality, assembles the components into a finished product using local labor, and sells them to unrelated wholesalers in Countries A, B, and C using its own sales force.The foreign subsidiary has paid no dividends to the parent this year.What tax issues should Quality's Director of Taxes consider with respect to these activities?

Accepted Answer

• Is the Country C corporation a control

Question 15

Jose, a U.S.citizen, has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?

Accepted Answer

@#IMG-DLM& ^a$12,500 ×

Question 16

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 17

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 18

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 19

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

Accepted Answer

The branch profits tax is imposed on the

Question 20

A nonresident alien cannot

Accepted Answer

A)  elect to be treated as a resident alien. 
B)  elect to be treated as a resident alien before satisfying the substantial presence test for the calendar year following the election year if unmarried. 
C)  make an irrevocable election to be treated as a resident alien after satisfying the substantial presence test. 
D)  make an election to be treated as a resident alien if married to a resident alien. 
A)  elect to be treated as a resident alien. 
B)  elect to be treated as a resident alien before satisfying the substantial presence test for the calendar year following the election year if unmarried. 
C)  make an irrevocable election to be treated as a resident alien after satisfying the substantial presence test. 
D)  make an election to be treated as a resident alien if married to a resident alien.

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.

Excess foreign tax credits can be carried back one year and forward five years.

Discuss the Sec.482 rules concerning the sale of goods and services between a domestic parent corporation and a foreign subsidiary at a lower-than-normal price.

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.

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

Identify which of the following statements is false.

Identify which of the following statements is true.

Jose, a U.S.citizen, has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?

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

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.

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

A nonresident alien cannot

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: US Taxation of Foreign-Related Transactions

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.

Excess foreign tax credits can be carried back one year and forward five years.

Discuss the Sec.482 rules concerning the sale of goods and services between a domestic parent corporation and a foreign subsidiary at a lower-than-normal price.

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.

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

Identify which of the following statements is false.

Identify which of the following statements is true.

Jose, a U.S.citizen, has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?

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

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.

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

A nonresident alien cannot

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