Question 1

Yvonne is a citizen of France and does not have permanent resident status in the United States.During the last three years she has spent a number of days in the United States.  Is Yvonne treated as a U.S.resident for the current year?

Accepted Answer

A)  No, because Yvonne is a citizen of France.
B)  No, because Yvonne was not present in the United States at least 183 days during the current year.
C)  No, because although Yvonne was present in the United States at least 31 days during the current year, she was not present at least 183 days in a single year during the current or prior two years.
D)  Yes, because Yvonne was present in the United States at least 31 days during the current year and 215 days during the current and prior two years (using the appropriate fractions for the prior years) .E) A) and B)
F) A) and C)

Question 2

BrazilCo, Inc., a foreign corporation with a U.S.trade or business, has U.S.-source income as follows.
  Determine BrazilCo's total U.S.tax liability for the year, assuming a 35% corporate rate and no tax treaty.BrazilCo leaves its U.S.branch profits invested in the United States and does not otherwise repatriate any of its U.S.assets during the year.

Accepted Answer

BrazilCo's U.S.tax l...

Question 3

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following income items does not represent Subpart F income if it is earned by a controlled foreign corporation in Fredonia? Purchase of inventory from the U.S.parent, followed by:

Accepted Answer

A)  Sale to anyone outside Fredonia.
B)  Sale to anyone inside Fredonia.
C)  Sale to a related party outside Fredonia.
D)  Sale to a non-related party outside Fredonia.E) B) and D)
F) C) and D) B

Question 5

Waldo, Inc., a U.S.corporation, owns 100% of Orion, Ltd., a foreign corporation.Orion earns only general basket income.During the current year, Orion paid Waldo a $5,000 dividend. The foreign tax credit associated with this dividend is $3,000.The foreign jurisdiction requires a withholding tax of 10%, so Waldo received only $4,500 in cash as a result of the dividend.What is Waldo's total U.S.gross income reported as a result of the $4,500 cash received?

Accepted Answer

A)  $8,000.
B)  $5,000.
C)  $4,500.
D)  $3,000.E) All of the above
F) None of the above

Question 6

Which of the following determinations requires knowing the amount of one's foreign-source gross income?

Accepted Answer

A)  Itemized deductions.
B)  Foreign tax credit.
C)  Calculation of a U.S.person's total taxable income.
D)  Calculation of a U.S.person's deductible interest expense.E) C) and D)
F) A) and C)

Question 7

Which of the following statements regarding income sourcing is not correct?

Accepted Answer

A)  U.S.persons benefit from earning low-tax foreign-source income.
B)  Foreign persons generally benefit from avoiding U.S.-source income classification.
C)  U.S.persons are not concerned with source of income because all their income is subject to U.S.tax under a worldwide system.
D)  Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States.E) B) and D)
F) None of the above

Question 8

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Accepted Answer

A)  Jen, Kathy, Leslie, David, Ben, and Mike are all U.S.citizens.
B)  Jen, Kathy, Leslie, David, and Ben are all U.S.citizens.David is married to Kathy.Mike is a foreign resident and citizen.
C)  Jen, Kathy, Leslie, David, and Ben are all U.S.citizens.Ben is Mike's son.Mike is a foreign resident and citizen.
D)  Jen, Kathy, Leslie, David, and Ben are all U.S.citizens.Mike is a foreign resident and citizen.E) C) and D)
F) All of the above A

Question 9

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the Euro as its functional currency.

Accepted Answer

A) True 
 B)False  True

Question 10

Which of the following statements regarding the sourcing of dividend income is true?

Accepted Answer

A)  Dividends are sourced based on the residence of the recipient.
B)  Dividends from a U.S.corporation are U.S.source, without regard to whether the U.S.corporation is an 80-20 company.
C)  Dividends from a U.S.corporation are foreign-source, if the U.S.corporation is an 80-20 company.
D)  Dividends from a U.S.corporation are foreign-source based on the percentage of foreign-source income earned by the U.S.payor.E) B) and D)
F) A) and B)

Question 11

Losses and deductions, similar to income items, can be U.S.- or foreign-source.

Accepted Answer

A) True 
 B)False

Question 12

Nico lives in California. She was born in Peru but holds a green card. Nico is a nonresident alien (NRA).

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Accepted Answer

A)  The Subpart F income provisions provide certainty as to the U.S.income tax treatment of cross-border transactions.
B)  The Subpart F income provisions allow deferral of foreign-source income from U.S.taxation.
C)  The Subpart F income provisions prevent shifting of income from the United States to low-tax foreign jurisdictions.
D)  The Subpart F income provisions prevent shifting of income from the United States to high-tax foreign jurisdictions.E) A) and D)
F) A) and C)

Question 14

Gains on the sale of U.S.real property held directly or indirectly through U.S.stock ownership by NRAs and foreign corporations are subject to taxation under FIRPTA.

Accepted Answer

A) True 
 B)False

Question 15

Section 482 is used by the Treasury to:

Accepted Answer

A)  Force taxpayers to use arms-length transfer pricing on transactions between related parties.
B)  Reallocate income, deductions, etc., to a related taxpayer to minimize tax liability.
C)  Increase information that is reported about U.S.corporations with non-U.S.owners.
D)  All of the above.
E)  None of the above.F) A) and C)
G) C) and D)

Question 16

Generally, accrued foreign income taxes are translated at the:

Accepted Answer

A)  Exchange rate when the taxes are paid.
B)  Exchange rate on the date when the taxes are accrued.
C)  Average exchange rate for the tax year to which the taxes relate.
D)  Average exchange rate for the last five tax years.E) A) and B)
F) A) and C)

Question 17

Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

Accepted Answer

A) True 
 B)False

Question 18

Dark, Inc., a U.S.corporation, operates Dunkel, an unincorporated branch manufacturing operation in Germany.Dark reports $100,000 of taxable income from Dunkel on its U.S.tax return, along with $400,000 of taxable income from its U.S.operations.Dark paid $40,000 in German income taxes related to the $100,000 of Dunkel income. Assuming a U.S.tax rate of 35%, what is Dark's U.S.tax liability after any allowable foreign tax credits?

Accepted Answer

A)  $35,000.
B)  $135,000.
C)  $140,000.
D)  $175,000.E) B) and C)
F) A) and D)

Question 19

Which of the following statements regarding the U.S.taxation of foreign persons is true?

Accepted Answer

A)  Foreign persons never are subject to U.S.income tax.
B)  Foreign persons are subject to U.S.income tax only on gains from U.S.real property.
C)  Foreign persons are subject to a withholding tax on foreign-source portfolio income.
D)  Foreign persons are subject to a withholding tax on U.S.-source portfolio income.E) A) and C)
F) A) and B)

Question 20

GreenCo, a domestic corporation, earns $25 million of taxable income from U.S.sources and $5 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Accepted Answer

A)  $30 million.
B)  $25 million.
C)  $30 million less any tax paid on U.S.income.
D)  $25 million less any tax paid on the foreign income.E) A) and B)
F) A) and C)

Exam 25: Taxation of International Transactions

Correct Answer
verified

Correct Answer
verified
BrazilCo's U.S.tax l...
View Answer

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Correct Answer
verified

Which of the following income items does not represent Subpart F income if it is earned by a controlled foreign corporation in Fredonia? Purchase of inventory from the U.S.parent, followed by:

Correct Answer
verified
B

Correct Answer
verified

Which of the following determinations requires knowing the amount of one's foreign-source gross income?

Correct Answer
verified

Which of the following statements regarding income sourcing is not correct?

Correct Answer
verified

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Correct Answer
verified
A

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the Euro as its functional currency.

Correct Answer
verified
True

Which of the following statements regarding the sourcing of dividend income is true?

Correct Answer
verified

Losses and deductions, similar to income items, can be U.S.- or foreign-source.

Correct Answer
verified

Nico lives in California. She was born in Peru but holds a green card. Nico is a nonresident alien (NRA).

Correct Answer
verified

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Correct Answer
verified

Gains on the sale of U.S.real property held directly or indirectly through U.S.stock ownership by NRAs and foreign corporations are subject to taxation under FIRPTA.

Correct Answer
verified

Section 482 is used by the Treasury to:

Correct Answer
verified

Generally, accrued foreign income taxes are translated at the:

Correct Answer
verified

Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

Correct Answer
verified

Correct Answer
verified

Which of the following statements regarding the U.S.taxation of foreign persons is true?

Correct Answer
verified

GreenCo, a domestic corporation, earns $25 million of taxable income from U.S.sources and $5 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Correct Answer
verified

Exam 25: Taxation of International Transactions

Yvonne is a citizen of France and does not have permanent resident status in the United States.During the last three years she has spent a number of days in the United States. Is Yvonne treated as a U.S.resident for the current year?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedBrazilCo's U.S.tax l...View AnswerShow Answer

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Correct AnswerverifiedShow Answer

Which of the following income items does not represent Subpart F income if it is earned by a controlled foreign corporation in Fredonia? Purchase of inventory from the U.S.parent, followed by:

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

Which of the following determinations requires knowing the amount of one's foreign-source gross income?

Correct AnswerverifiedShow Answer

Which of the following statements regarding income sourcing is not correct?

Correct AnswerverifiedShow Answer

In which of the following independent situations would Slane, a foreign corporation, be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen, 10% by Kathy, 12% by Leslie, 10% by David, 8% by Ben, and 48% by Mike.

Correct AnswerverifiedA

A Qualified Business Unit of a U.S.corporation that operates in Germany generally uses the Euro as its functional currency.

Correct AnswerverifiedTrue

Which of the following statements regarding the sourcing of dividend income is true?

Correct AnswerverifiedShow Answer

Losses and deductions, similar to income items, can be U.S.- or foreign-source.

Correct AnswerverifiedShow Answer

Nico lives in California. She was born in Peru but holds a green card. Nico is a nonresident alien (NRA).

Correct AnswerverifiedShow Answer

Which of the following statements best describes the primary purpose of the Subpart F income provisions?

Correct AnswerverifiedShow Answer

Gains on the sale of U.S.real property held directly or indirectly through U.S.stock ownership by NRAs and foreign corporations are subject to taxation under FIRPTA.

Correct AnswerverifiedShow Answer

Section 482 is used by the Treasury to:

Correct AnswerverifiedShow Answer

Generally, accrued foreign income taxes are translated at the:

Correct AnswerverifiedShow Answer

Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements regarding the U.S.taxation of foreign persons is true?

Correct AnswerverifiedShow Answer

GreenCo, a domestic corporation, earns $25 million of taxable income from U.S.sources and $5 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
BrazilCo's U.S.tax l...
View Answer

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified