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Exam 25: Taxation of International Transactions

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Question 71

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In international corporate income taxation,what are the uses of the "sourcing rules" in computing Federal taxable income?

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The sourcing of income and deductions in...

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Question 72

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USCo,a U.S.corporation,reports worldwide taxable income of $500,000,including a $100,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's undistributed earnings and profits are $1 million and it has paid $200,000 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) ?

A) $500,000
B) $200,000
C) $100,000
D) $20,000

E) None of the above
F) A) and B)

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Question 73

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Discuss the primary purposes of income tax treaties.

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?

Dividends received from Murdock Corp. ,a corporation organized in Sustenato that earns 70% of its income from U.S.business activities,are 70% U.S.-source income.

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

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 euro: $1.35.Payment is due in 90 days.Arendt acquires 200,000 euros and pays for the machine when 1 euro: $1.15.What is the basis of the asset to Arendt and what is the foreign currency exchange gain or loss,if any?

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

Given the following information,determine if FanCo,a foreign corporation,is a CFC. Shareholders of Voting foreign corporation power Classification Murray 24% U.S.person Nancy 20% U.S.person Otto 40% Foreign person Patricia 16% U.S.person Patricia is Murray's daughter.

Which of the following statements regarding income sourcing is correct?

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

GoldCo,a U.S.corporation,incorporates its foreign branch in a § 351 exchange,creating GreenCo,a wholly owned foreign corporation.GoldCo 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 U.S.What gain or loss,if any,does GoldCo recognize as a result of this transaction?

The following income of a foreign corporation is not subject to the regular U.S.corporate income tax rates.

Kunst,a U.S.corporation,generates $100,000 of foreign-source income in the general income basket and $40,000 of foreign-source income in the passive income basket.Kunst's worldwide taxable income is $1,200,000,and its U.S.tax liability before FTC is $420,000.Foreign taxes attributable to the general income basket are $60,000 and to the passive income are $4,000.What is Kunst's foreign tax credit for the tax year?

The transfer of the assets of a U.S.corporation's foreign branch to a newly formed foreign corporation is always tax deferred under § 351.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. a.Indirect credit b.Direct credit c.One d.Two e.Ten f.Twenty g.Gross-up (§ 78) h.Overall foreign loss -A deemed paid foreign tax credit is included in gross income.

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

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

Wellington,Inc. ,a U.S.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.Wellington has been a CFC for the entire year and makes no distributions in the current year.Wellington must include in gross income (before any § 78 gross-up) :

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 -Income of foreign person taxed through filing of a U.S.tax return with deductions allowed against gross income.