Question 1

U.S. income tax treaties can be described as:

Accepted Answer

A)   Napoleonic.
B)   Spoke-and-Wheel.
C)   Balanced.
D)   Bilateral.E) A) and B)
F) A) and C)

Question 2

Which of the following statements is true, concerning the sourcing of income from inventory produced by the taxpayer in the U.S. and sold outside the U.S.?

Accepted Answer

A)   Because the inventory is manufactured in the U.S., all of the inventory income is U.S. source.
B)   If title passes on the inventory outside the U.S., all of the inventory income is foreign source.
C)   The taxpayer may source one-half the income based on title passage and one-half the income based on where the sale negotiation takes place.
D)   The taxpayer may source one-half the income based on title passage and one-half the income based on location of production assets.E) A) and B)
F) A) and C)

Question 3

Under a territorial income tax system, a country assesses an income tax on:

Accepted Answer

A)   Income of all entities earned within its borders.
B)   Income of its citizens earned in other countries.
C)   Both a. and b.
D)   Neither a. nor b.E) A) and B)
F) A) and C)

Question 4

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

Accepted Answer

A)   There are about 70 bilateral income tax treaties between the U.S. and other countries.
B)   Tax 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.
C)   U.S. income tax treaties are written to set up a "network" of up to five foreign countries that are covered by the treaty language.
D)   None of the above statements is false.E) A) and D)
F) B) and D)

Question 5

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

Accepted Answer

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

Question 6

Serena, a nonresident alien, is employed by GlobalCo, a non-U.S. corporation. Serena works in the United States for 3 days during the year, receiving a gross salary of $2,500 for this period. GlobalCo is not engaged in a U.S. trade or business. Under the "commercial traveler" exception, the $2,500 is not classified as U.S.-source income.

Accepted Answer

A) True 
 B)False

Question 7

Arendt, Inc., a U.S. corporation, purchases a piece of equipment for use in its manufacture of custom pianos. The equipment is acquired in Ireland at a cost of 200,000 euros when 1€: $1.25. Payment is due in 90 days. Arendt acquires 200,000 euros and pays for the machine when 1€: $1.15. What is the basis of the asset to Arendt and what is the foreign currency exchange gain or loss, if any?

Accepted Answer

No foreign currency exchange gain or los...

Question 8

A U.S. parent can deduct the current operating loss of a non-U.S. entity that it owns if the non-U.S. entity is operated as a:

Accepted Answer

A)   Branch.
B)   Subsidiary.
C)   Both a. and b.
D)   Neither a. nor b.E) All of the above
F) None of the above

Question 9

Wood, a U.S. corporation, owns Holz, a German corporation. Wood receives a dividend (non-Subpart F income)  from Holz of 75,000€. The average exchange rate for the year is $1US: 0.6€, and the exchange rate on the date of the dividend distribution is $1US: 0.8€. Wood's exchange gain or loss is:

Accepted Answer

A)   $15,000 loss.
B)   $15,000 gain.
C)   $75,000 gain.
D)   $0. There is no exchange gain or loss on a dividend distribution.E) B) and C)
F) None of the above

Question 10

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
a. Foreign base company income
b. Foreign personal holding company income
c. Controlled foreign corporation
d. U.S. shareholder
e. Previously taxed income 
f. More than 10 percent
g. More than 50 percent 
h. More than 80 percent
-Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

Accepted Answer

The answer of Match the definition with the correct term....

Question 11

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
a. Foreign base company income
b. Foreign personal holding company income
c. Controlled foreign corporation
d. U.S. shareholder
e. Previously taxed income 
f. More than 10 percent
g. More than 50 percent 
h. More than 80 percent
-A CFC's profits from sales of goods and services.

Accepted Answer

The answer of Match the definition with the correct term....

Question 12

A U.S. taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect) paid or accrued.

Accepted Answer

A) True 
 B)False

Question 13

Match the definition with the correct term.
a. Expatriate 
b. Resident
c. Nonresident alien
d. U.S. trade or business 
e. Branch profits tax
f. Effectively connected income
-A non-U.S. citizen who holds a "green card."

Accepted Answer

The answer of Match the definition with the correct term.
a....

Question 14

The United States has in force income tax treaties with about 70 countries.

Accepted Answer

A) True 
 B)False

Question 15

Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf's broker in Oslo. How is this gain treated for U.S. tax purposes?

Accepted Answer

A)   It is foreign-source income subject to U.S. taxation.
B)   It is foreign-source income not subject to U.S. taxation.
C)   It is U.S.-source income subject to U.S. taxation.
D)   It is U.S.-source income exempt from U.S. taxation.E) B) and C)
F) All of the above

Question 16

Discuss the primary purposes of income tax treaties.

Accepted Answer

The primary purpose of an income tax tre...

Question 17

A U.S. business conducts international communications activities between the U.S. and Spain. The resulting income is sourced 100% to the U. S., the residence of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 18

A controlled foreign corporation (CFC)  realizes Subpart F income from:

Accepted Answer

A)   Purchase of inventory from unrelated U.S. person and sale outside the CFC country.
B)   Purchase of inventory from a related U.S. person and sale outside the CFC country.
C)   Services performed for the U.S. parent in a country in which the CFC was organized.
D)   Services performed on behalf of an unrelated party in a country outside the country in which the CFC was organized.E) A) and B)
F) C) and D)

Question 19

Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

Accepted Answer

A)   Intangibles income.
B)   Passive income.
C)   Business income.
D)   None of the above are separate FTC limitation baskets.
E)   All of the above are separate FTC limitation baskets.F) A) and B)
G) A) and C)

Question 20

Income tax treaties provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S. statutory law.

Accepted Answer

A) True 
 B)False

Exam 25: Taxation of International Transactions

Correct Answer
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Match the definition with the correct term. a. Expatriate b. Resident c. Nonresident alien d. U.S. trade or business e. Branch profits tax f. Effectively connected income -A non-U.S. citizen who holds a "green card."

Correct Answer
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Which of the following statements regarding the U.S. taxation of non-U.S. persons is true?

Correct Answer
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No foreign currency exchange gain or los...
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A U.S. taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect) paid or accrued.

Correct Answer
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Under a territorial income tax system, a country assesses an income tax on:

Correct Answer
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Correct Answer
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A U.S. parent can deduct the current operating loss of a non-U.S. entity that it owns if the non-U.S. entity is operated as a:

Correct Answer
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Wood, a U.S. corporation, owns Holz, a German corporation. Wood receives a dividend (non-Subpart F income) from Holz of 75,000€. The average exchange rate for the year is $1US: 0.6€, and the exchange rate on the date of the dividend distribution is $1US: 0.8€. Wood's exchange gain or loss is:

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

Correct Answer
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Income tax treaties provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S. statutory law.

Correct Answer
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U.S. income tax treaties can be described as:

Correct Answer
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Which of the following statements is true, concerning the sourcing of income from inventory produced by the taxpayer in the U.S. and sold outside the U.S.?

Correct Answer
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Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

Correct Answer
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The United States has in force income tax treaties with about 70 countries.

Correct Answer
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Discuss the primary purposes of income tax treaties.

Correct Answer
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The primary purpose of an income tax tre...
View Answer

A U.S. business conducts international communications activities between the U.S. and Spain. The resulting income is sourced 100% to the U. S., the residence of the taxpayer.

Correct Answer
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Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf's broker in Oslo. How is this gain treated for U.S. tax purposes?

Correct Answer
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A controlled foreign corporation (CFC) realizes Subpart F income from:

Correct Answer
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Exam 25: Taxation of International Transactions

Correct AnswerverifiedShow Answer

Match the definition with the correct term. a. Expatriate b. Resident c. Nonresident alien d. U.S. trade or business e. Branch profits tax f. Effectively connected income -A non-U.S. citizen who holds a "green card."

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNo foreign currency exchange gain or los...View AnswerShow Answer

A U.S. taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect) paid or accrued.

Correct AnswerverifiedShow Answer

Under a territorial income tax system, a country assesses an income tax on:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A U.S. parent can deduct the current operating loss of a non-U.S. entity that it owns if the non-U.S. entity is operated as a:

Correct AnswerverifiedShow Answer

Wood, a U.S. corporation, owns Holz, a German corporation. Wood receives a dividend (non-Subpart F income) from Holz of 75,000€. The average exchange rate for the year is $1US: 0.6€, and the exchange rate on the date of the dividend distribution is $1US: 0.8€. Wood's exchange gain or loss is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Income tax treaties provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S. statutory law.

Correct AnswerverifiedShow Answer

U.S. income tax treaties can be described as:

Correct AnswerverifiedShow Answer

Which of the following statements is true, concerning the sourcing of income from inventory produced by the taxpayer in the U.S. and sold outside the U.S.?

Correct AnswerverifiedShow Answer

Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

Correct AnswerverifiedShow Answer

The United States has in force income tax treaties with about 70 countries.

Correct AnswerverifiedShow Answer

Discuss the primary purposes of income tax treaties.

Correct AnswerverifiedThe primary purpose of an income tax tre...View AnswerShow Answer

A U.S. business conducts international communications activities between the U.S. and Spain. The resulting income is sourced 100% to the U. S., the residence of the taxpayer.

Correct AnswerverifiedShow Answer

Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf's broker in Oslo. How is this gain treated for U.S. tax purposes?

Correct AnswerverifiedShow Answer

A controlled foreign corporation (CFC) realizes Subpart F income from:

Correct AnswerverifiedShow Answer

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No foreign currency exchange gain or los...
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The primary purpose of an income tax tre...
View Answer

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