Question 1

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

Accepted Answer

A)  Foreign persons are never 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 U.S.-source FDAP income.
D)  Foreign persons are subject to a withholding tax on foreign-source FDAP income.E) A) and C)
F) A) and D)

Question 2

Madison is a citizen of Italy 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 Madison treated as a U.S.resident for the current year?

Accepted Answer

A)  Yes,because Madison was present in the United States at least 31 days during the current year and 195 days during the current and prior two years (using the appropriate fractions for the prior years) .
B)  No,because although Madison 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.
C)  No,because Madison is a citizen of Italy.
D)  No,because Madison was not present at least 183 days during the current year.E) B) and C)
F) A) and C)

Question 3

RainCo,a domestic corporation,owns a number of patents related to designing umbrellas.RainCo licenses these patents to unrelated parties.TexCo,a domestic corporation,paid RainCo $100,000 in royalties related to these licenses.TexCo uses the patent information in its manufacturing process in its Canadian plant.IrishCo,an Irish corporation,paid RainCo $25,000 in royalties related to the licenses.IrishCo uses the patent information in its manufacturing process in its Michigan manufacturing plant.How much foreign-source royalty income did RainCo earn from these licenses?

Accepted Answer

A)  $0.
B)  $25,000.
C)  $100,000.
D)  $125,000.E) B) and C)
F) A) and D)

Question 4

USCo,a domestic corporation,has worldwide taxable income of $1,500,000,including a $300,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's post-1986 undistributed earnings and profits are $16 million and it has paid $10 million of foreign income taxes attributable to these earnings.What is USCo's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation) ?

Accepted Answer

A)  $10 million.
B)  $16 million.
C)  $187,500.
D)  $487,500.E) None of the above
F) All of the above

Question 5

Which of the following statements best describes the purpose of § 482?

Accepted Answer

A)  To place a controlled entity on a tax parity with an uncontrolled entity with regard to prices charged by the entities.
B)  To allow the IRS to select the best method for determining transfer prices for U.S.taxpayers.
C)  To alleviate double taxation problems generated by related entities doing business in two or more countries.
D)  To provide tax benefits to U.S.multinationals that export U.S.produced property.E) None of the above
F) C) and D)

Question 6

Interest paid to an unrelated party by a domestic corporation that historically earns 81% 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 7

The existence of a U.S.trade or business is a prerequisite to having effectively connected income.

Accepted Answer

A) True 
 B)False

Question 8

Miles,Ltd. ,a foreign corporation,has a U.S.branch that earns effectively connected earnings and profits (after income taxes) of $600,000 for the tax year.The branch's U.S.net equity at the beginning of the tax year is $2 million and at the end of the tax year is $2,800,000.Miles is in a nontreaty country.Miles' branch profits tax for the year is:

Accepted Answer

A)  $0.
B)  $180,000.
C)  $600,000.
D)  $2,800,000.E) All of the above
F) A) and C)

Question 9

ForCo,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.ForCo's current year E & P is $150,000 and it's accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

Accepted Answer

A)  $18 million.
B)  $900,000.
C)  $150,000.
D)  $0.E) A) and D)
F) All of the above

Question 10

U.S.income tax treaties:

Accepted Answer

A)  Provide for primary taxation with a tax credit for income sourced in one country and earned by a resident of the other treaty country.
B)  Provide for taxation exclusively by the source country.
C)  Provide that the country with the highest tax rate will be allowed exclusive tax collection.
D)  Provide for taxation exclusively by the country of residence.E) B) and C)
F) None of the above

Question 11

Which of the following statements is false in regard to the U.S.income tax treaty program?

Accepted Answer

A)  There are over 50 income tax treaties between the U.S.and other countries.
B)  For the most part,neither country is prohibited from taxing the income of its residents.
C)  The treaties generally provide for primary taxing rights that require the other treaty partner to allow a credit for the taxes paid on the twice-taxed income.
D)  Residence of the taxpayer is an important consideration,while the presence of a permanent establishment is not.
E)  None of the above statements is false.F) A) and D)
G) A) and C)

Question 12

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

Accepted Answer

A)  Dividends from foreign corporations are always foreign source.
B)  Dividends are sourced based on the residence of the recipient.
C)  Dividends from foreign corporations are foreign-source only to the extent that 80% or more of the foreign corporation's gross income for the 3 years preceding the year of the dividend payment was effectively connected with the conduct of a foreign trade or business.
D)  A percentage of dividends from foreign corporations are U.S.source to the extent that 25% or more of the foreign corporation's gross income for the 3 years preceding the year of the dividend payment was effectively connected with the conduct of a U.S.trade or business.E) A) and B)
F) All of the above

Question 13

Which of the following determinations does not require knowing the amounts of one's U.S.- versus foreign-source income?

Accepted Answer

A)  Calculation of U.S.withholding tax on the FDAP income of foreign persons.
B)  Calculation of a foreign person's income effectively connected with carrying on a U.S.trade or business.
C)  Calculation of the § 911 exclusion.
D)  Calculation of a U.S.person's total taxable income.E) All of the above
F) None of the above

Question 14

Which of the following is not a U.S.person?

Accepted Answer

A)  Domestic corporation.
B)  Citizen of Turkey with U.S.permanent residence status (i.e. ,green card) .
C)  U.S.corporation 100% owned by a foreign corporation.
D)  Foreign corporation 100% owned by a domestic corporation.E) All of the above
F) A) and B)

Question 15

Which of the following is a true statement regarding a tax haven?

Accepted Answer

A)  A country with high internal taxes.
B)  A country with no or low internal taxes.
C)  A country without income tax treaties.
D)  A country that prohibits "treaty shopping."
E)  None of the above statements is true.F) B) and E)
G) C) and E)

Question 16

Assuming all sales are made to unrelated customers outside the CFC's country of incorporation,which of the following types of income earned by a CFC is Subpart F income?

Accepted Answer

A)  Income from sale of property manufactured by the CFC.
B)  Income from the sale of property manufactured by a subsidiary of the CFC in the same country as the CFC.
C)  Income from the sale of property manufactured by the U.S.parent of the CFC outside the CFC's country.
D)  Income from the sale of property manufactured by an unrelated person outside the CFC's country of incorporation.E) B) and D)
F) None of the above

Question 17

Given the following information,determine whether Greta,an alien,is a U.S.resident for 2010.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Accepted Answer

For Federal income tax purposes,Greta is...

Question 18

Income from international communications activities earned by a U.S.person is sourced 100% in the United States.

Accepted Answer

A) True 
 B)False

Question 19

Amelia,Inc. ,a domestic corporation,has worldwide taxable income of $8 million,including a $600,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's post-1986 undistributed E & P are $18 million and it has paid $12 million of foreign income taxes attributable to these earnings.What is Amelia's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation) ?

Accepted Answer

A)  $0.
B)  $400,000.
C)  $12 million.
D)  $18 million
E)  Some other amount.F) A) and B)
G) A) and C)

Question 20

Which of the following income items do not represent Subpart F income if earned by a controlled foreign corporation?

Accepted Answer

A)  Purchase of inventory from a U.S.parent and sale to anyone inside the CFC country.
B)  Purchase of inventory from a U.S.parent and sale to anyone outside the CFC country.
C)  Purchase of inventory from a U.S.parent and sale to a related party outside the CFC country.
D)  Purchase of inventory from a U.S.parent and sale to a non-related party outside the CFC country.E) A) and B)
F) A) and C)

Exam 25: Taxation of International Transactions

Correct Answer
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Given the following information,determine whether Greta,an alien,is a U.S.resident for 2010.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Correct Answer
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For Federal income tax purposes,Greta is...
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Interest paid to an unrelated party by a domestic corporation that historically earns 81% 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
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Income from international communications activities earned by a U.S.person is sourced 100% in the United States.

Correct Answer
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Which of the following income items do not represent Subpart F income if earned by a controlled foreign corporation?

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The existence of a U.S.trade or business is a prerequisite to having effectively connected income.

Correct Answer
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U.S.income tax treaties:

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ForCo,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.ForCo's current year E & P is $150,000 and it's accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

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Which of the following is a true statement regarding a tax haven?

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Which of the following statements is false in regard to the U.S.income tax treaty program?

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

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Which of the following statements best describes the purpose of § 482?

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

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Which of the following is not a U.S.person?

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Assuming all sales are made to unrelated customers outside the CFC's country of incorporation,which of the following types of income earned by a CFC is Subpart F income?

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Which of the following determinations does not require knowing the amounts of one's U.S.- versus foreign-source income?

Correct Answer
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Exam 25: Taxation of International Transactions

Correct AnswerverifiedShow Answer

Given the following information,determine whether Greta,an alien,is a U.S.resident for 2010.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Correct AnswerverifiedFor Federal income tax purposes,Greta is...View AnswerShow Answer

Interest paid to an unrelated party by a domestic corporation that historically earns 81% 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

Income from international communications activities earned by a U.S.person is sourced 100% in the United States.

Correct AnswerverifiedShow Answer

Which of the following income items do not represent Subpart F income if earned by a controlled foreign corporation?

Correct AnswerverifiedShow Answer

The existence of a U.S.trade or business is a prerequisite to having effectively connected income.

Correct AnswerverifiedShow Answer

U.S.income tax treaties:

Correct AnswerverifiedShow Answer

ForCo,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.ForCo's current year E & P is $150,000 and it's accumulated E & P is $18 million.What is the current year Subpart F deemed dividend to USCo?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Which of the following is a true statement regarding a tax haven?

Correct AnswerverifiedShow Answer

Which of the following statements is false in regard to the U.S.income tax treaty program?

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Madison is a citizen of Italy 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 Madison treated as a U.S.resident for the current year?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements best describes the purpose of § 482?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not a U.S.person?

Correct AnswerverifiedShow Answer

Assuming all sales are made to unrelated customers outside the CFC's country of incorporation,which of the following types of income earned by a CFC is Subpart F income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following determinations does not require knowing the amounts of one's U.S.- versus foreign-source income?

Correct AnswerverifiedShow Answer

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For Federal income tax purposes,Greta is...
View Answer

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