Question 1

Identify which of the following statements is false.

Accepted Answer

A)  The foreign-earned income exclusion is $91,400 in 2009. 
B)  The primary purpose for the foreign-earned income exclusion is to prevent double taxation of income. 
C)  A taxpayer who is physically present in a foreign country for 330 full days out of a 12-month period satisfies the bona fide foreign resident test. 
D)  All of the above are false.

Question 2

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

Question 3

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

Question 4

Cane Corporation owns 45% of the stock of Edmonton Airline Corporation.In its first year of operations, Edmonton Airline, a Canadian corporation, reports $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 U.S.tax liability as a result of receiving the dividend? (Assume a 34% U.S.corporate tax rate.)

Accepted Answer

The answer of Cane Corporation owns 45% of the stock...

Question 5

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

Accepted Answer

The answer of Discuss the use of a "tax haven"...

Question 6

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 7

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 8

Zeta Corporation, incorporated in Country Z, is 100% owned by Zelda Corporation, a U.S.corporation.Zelda purchases some machines from an unrelated corporation, for use in Country A.The portion of the sales contract covering installation and maintenance of the machines is assigned by Zelda to Zeta.Zeta is to be paid for these services by Zelda.Does this qualify as foreign base company services income?

Accepted Answer

The answer of Zeta Corporation, incorporated in Country Z, is...

Question 9

A U.S.citizen accrued $120,000 of creditable foreign taxes last year.The citizen's foreign tax credit limitation for last year is $90,000 (only a single limitation need be calculated).The excess foreign tax credit limitation for the year preceding the year in which the excess foreign taxes were incurred is $2,000.A similar $2,000 excess foreign tax credit limitation position is expected in each of the next 10 years.What portion of the excess foreign taxes can be expected to be noncreditable because of the foreign tax credit limitation?

Accepted Answer

A)  $0 
B)  $2,000 
C)  $8,000 
D)  none of the above

Question 10

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 11

Discuss the advantages of conducting overseas business activities through a foreign corporation.

Accepted Answer

The answer of Discuss the advantages of conducting overseas business...

Question 12

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

Question 13

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.

Question 14

In accounting for multinational corporations,

Accepted Answer

A)  SFAS 109 requires companies to include taxes on repatriation of foreign earnings as a deferred tax asset. 
B)  the deferral of foreign earnings is a temporary difference. 
C)  SFAS 109 allows the parent to exclude taxes on repatriated foreign earnings if they will not be repatriated in the foreseeable future. 
D)  a corporation with excess foreign tax credits will record a deferred tax liability.

Question 15

Income is "effectively connected" with the conduct of a U.S.business only if

Accepted Answer

A)  the asset-use test is met. 
B)  the business activities test is met. 
C)  activities of the U.S. business are a material factor in the realization of the income. 
D)  Either A, B, or C can be correct.

Question 16

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.

Question 17

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 only a single basket is required, Karen's foreign tax credit that can be claimed is

Accepted Answer

A)  $5,000. 
B)  $8,000. 
C)  $10,000. 
D)  none of the above

Question 18

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 19

Guinness Corporation, a U.S.corporation, began operating overseas in the current year.This year, Guinness sold machine tools that it manufactured in the United States to Canadian companies from a branch office located in Toronto, purchased a 40% investment in a Brazilian corporation from which it received a dividend, and received royalties from an English firm that is the licensee of machine tool patents held by Guinness.The English firm uses the patents to manufacturer machine tools it sells in England.What international tax issues should Guinness's Director of Taxes consider with respect to these activities?

Accepted Answer

The answer of Guinness Corporation, a U.S.corporation, began operating overseas...

Question 20

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.

Exam 16: US Taxation of Foreign-Related Transactions

Identify which of the following statements is false.

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?

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

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

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.

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.

Discuss the advantages of conducting overseas business activities through a foreign corporation.

Identify which of the following statements is true.

In accounting for multinational corporations,

Income is "effectively connected" with the conduct of a U.S.business only if

Identify which of the following statements is true.

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 true.