Question 1

Columbia,Inc. ,a U.S.corporation,receives a $150,000 cash dividend from Starke,Ltd.Columbia owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P.What is Columbia's gross income related to the Starke dividend?

Accepted Answer

A)   $206,250
B)   $150,000
C)   $56,250
D)   $22,500E) B) and D)
F) None of the above

Question 2

Which of the following statements regarding income sourcing is correct?

Accepted Answer

A)   Everything else being equal,a larger foreign-source income decreases the foreign tax credit limitation for U.S.persons.
B)   Everything else being equal,a larger foreign-source income increases the foreign tax credit limitation for U.S.persons.
C)   Everything else being equal,a larger U.S.-source income increases the foreign tax credit limitation for U.S.persons.
D)   Everything else being equal,changing foreign-source income does not change the foreign tax credit limitation for U.S.persons.E) A) and B)
F) A) and C)

Question 3

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

Accepted Answer

A)   Non-U.S.persons not engaged in a U.S.trade or business are indifferent as to whether any of their income is U.S.source.
B)   All income earned by non-U.S.persons not engaged in a U.S.trade or business is treated as foreign source.
C)   U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S.trade or business.
D)   Certain U.S.-source investment income earned by non-U.S.persons not engaged in a U.S.trade or business may be subject to a U.S.withholding tax.E) None of the above
F) B) and C)

Question 4

Maxim,Inc. ,a U.S.corporation,reports worldwide taxable income of $8 million,including a $900,000 dividend from ForCo,a wholly-owned foreign corporation.ForCo's undistributed E & P are $15 million and it has paid $6 million of foreign income taxes attributable to these earnings.What is Maxim's deemed paid foreign tax credit related to the dividend received (before consideration of any limitation) ?

Accepted Answer

A)   $0
B)   $360,000
C)   $900,000
D)   $6 millionE) All of the above
F) B) and D)

Question 5

Hendricks Corporation,a domestic corporation,owns 40 percent of Shane Corporation and 55 percent of Ferrell Corporation,both foreign corporations.Ferrell owns the other 60 percent of Shane Corporation.Both Shane and Ferrell are CFCs.

Accepted Answer

A) True 
 B)False

Question 6

AirCo,a domestic corporation,purchases inventory for resale from unrelated distributors within the United States and resells this inventory to customers outside the United States,with title passing outside the United States.What is the source of AirCo's inventory sales income?

Accepted Answer

A)   100% U.S.source.
B)   100% foreign source.
C)   50% U.S.source and 50% foreign source.
D)   50% foreign source and 50% sourced based on location of manufacturing assets.E) B) and C)
F) A) and C)

Question 7

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) All of the above
F) None of the above

Exam 16: Multijurisdictional Taxation

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

Correct Answer
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Columbia,Inc. ,a U.S.corporation,receives a $150,000 cash dividend from Starke,Ltd.Columbia owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P.What is Columbia's gross income related to the Starke dividend?

Correct Answer
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Correct Answer
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Hendricks Corporation,a domestic corporation,owns 40 percent of Shane Corporation and 55 percent of Ferrell Corporation,both foreign corporations.Ferrell owns the other 60 percent of Shane Corporation.Both Shane and Ferrell are CFCs.

Correct Answer
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Which of the following statements regarding income sourcing is correct?

Correct Answer
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AirCo,a domestic corporation,purchases inventory for resale from unrelated distributors within the United States and resells this inventory to customers outside the United States,with title passing outside the United States.What is the source of AirCo's inventory sales income?

Correct Answer
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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
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Exam 16: Multijurisdictional Taxation

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

Correct AnswerverifiedShow Answer

Columbia,Inc. ,a U.S.corporation,receives a $150,000 cash dividend from Starke,Ltd.Columbia owns 15% of Starke.Starke's E & P is $2 million and it has paid foreign taxes of $750,000 attributable to that E & P.What is Columbia's gross income related to the Starke dividend?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Hendricks Corporation,a domestic corporation,owns 40 percent of Shane Corporation and 55 percent of Ferrell Corporation,both foreign corporations.Ferrell owns the other 60 percent of Shane Corporation.Both Shane and Ferrell are CFCs.

Correct AnswerverifiedShow Answer

Which of the following statements regarding income sourcing is correct?

Correct AnswerverifiedShow Answer

AirCo,a domestic corporation,purchases inventory for resale from unrelated distributors within the United States and resells this inventory to customers outside the United States,with title passing outside the United States.What is the source of AirCo's inventory sales income?

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 AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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