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The source of income received for the use of intangible property is the home country of the owner of the property producing the income.

A) True
B) False

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WorldCo,a foreign corporation not engaged in a U.S.trade or business,receives $50,000 in interest income from deposits with the foreign branch of a U.S.bank.The U.S.bank earns 78% of its income from foreign sources.How much of WorldCo's interest income is U.S.source?


A) $0.
B) $11,000.
C) $39,000.
D) $50,000.

E) None of the above
F) All of the above

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Copp,Inc.,a domestic corporation,owns 30% of a CFC that has $50 million of earnings and profits for the current year.Included in that amount is $20 million of Subpart F income.Copp has been a CFC for the entire year and makes no distributions in the current year.Copp must include in gross income (before any ยง 78 gross-up) :


A) $0.
B) $50 million.
C) $20 million.
D) $6 million.

E) A) and B)
F) C) and D)

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Dividends received from Leprechaun,Ltd.,an Irish corporation that earns 40% of its income from U.S.business activities,are 40% U.S.-source income.

A) True
B) False

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


A) If title passes on the inventory outside the U.S., all of the inventory income is foreign source.
B) Because the inventory is manufactured in the U.S., all of the inventory income is U.S. source.
C) The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on location of production assets.
D) The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on where the sale negotiation takes place.

E) B) and C)
F) All of the above

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Monika,a nonresident alien,is employed by GlobalCo,a foreign corporation.Monika works in the United States for 32 days during the year,receiving a gross salary of $2,900 for this period.GlobalCo is not engaged in a U.S.trade or business.Under the "commercial traveler" exception,the $2,900 is not classified as U.S.-source income.

A) True
B) False

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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?


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

E) A) and C)
F) A) and B)

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An advance pricing agreement (APA) is used between:


A) Two or more governments.
B) Two related taxpayers.
C) The taxpayer and the IRS.
D) The IRS and U.S. taxing authorities.

E) A) and B)
F) A) and C)

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Scott,Inc.,a domestic corporation,receives a dividend of $700,000 from a non-CFC foreign corporation.Deemed-paid foreign taxes attributable to the dividend are $120,000.If Scott elects the FTC,its gross income attributable to this dividend is $700,000.

A) True
B) False

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Lang,an NRA who was not a resident of a treaty country,receives taxable dividends of $50,000 from U.S.corporations.Lang does not conduct a U.S.trade or business.Lang's dividends are taxed by the United States through withholding by the payor of:


A) 0%.
B) 15%.
C) 30%.
D) 35%.

E) A) and D)
F) B) and D)

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Shannon,a foreign person with a green card,spends the following days in the United States. Shannon,a foreign person with a green card,spends the following days in the United States.   Shannon's residency status for 2012 is: A)  U.S. resident because she has a green card. B)  U.S. resident since she was a U.S. resident for the past immediately preceding two years. C)  Not a U.S. resident because Shannon was not in the United states for at least 31 days during 2012. D)  Not a U.S. resident since, using the three-year test, Shannon is not present in the United states for at least 183 days. Shannon's residency status for 2012 is:


A) U.S. resident because she has a green card.
B) U.S. resident since she was a U.S. resident for the past immediately preceding two years.
C) Not a U.S. resident because Shannon was not in the United states for at least 31 days during 2012.
D) Not a U.S. resident since, using the three-year test, Shannon is not present in the United states for at least 183 days.

E) A) and B)
F) A) and C)

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"Inbound" and "offshore" transfers are exempt from taxation under ยง 367.

A) True
B) False

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BlueCo,a domestic corporation,incorporates its foreign branch in a ยง 351 exchange,creating GreenCo,a wholly owned foreign corporation.BlueCo transfers $200 in inventory (basis = $50) and $900 in land (basis = $950) to GreenCo.GreenCo uses these assets in carrying on a trade or business outside the United States.What gain or loss,if any,is recognized as a result of this transaction?


A) $0.
B) ($50) .
C) $100.
D) $150.

E) A) and B)
F) A) and C)

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Which of the following statements regarding a foreign person's U.S.tax consequences is true?


A) Foreign persons must be physically present in the United States before any U.S.-source income is subject to U.S. income or withholding tax.
B) Foreign individuals may be subject to U.S. income tax but foreign corporations are never subject to U.S. income tax.
C) Foreign persons are only subject to U.S. income or withholding tax if engaged in a U.S. trade or business.
D) Foreign persons are potentially subject to U.S. withholding tax on U.S.-source investment income.

E) A) and B)
F) A) and C)

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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?


A) $8,000.
B) $5,000.
C) $4,500.
D) $3,000.

E) A) and D)
F) A) and C)

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Discuss the primary purposes of income tax treaties.

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The primary purpose of an income tax tre...

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


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) None of the above
F) C) and D)

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Julio,a nonresident alien,realizes a gain on the sale of commercial real estate located in Omaha.The real estate was sold to Mariana,Julio's cousin who is also a nonresident alien.Julio recognizes foreign-source income from the sale because his home country is not the U.S.

A) True
B) False

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Which of the following foreign taxes paid by a U.S.corporation is eligible for the foreign tax credit?


A) Real property taxes.
B) Value added taxes.
C) Dividend withholding taxes.
D) Sales taxes.

E) B) and C)
F) C) and D)

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Given the following information,determine if FanCo,a foreign corporation,is a CFC. Given the following information,determine if FanCo,a foreign corporation,is a CFC.    Patricia is Murray's daughter.   Patricia is Murray's daughter. Given the following information,determine if FanCo,a foreign corporation,is a CFC.    Patricia is Murray's daughter.

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Murray,Nancy,and Patricia are U.S.shareh...

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