Question 1

Youngster, Inc., a U.S. corporation, earns $20,000 in passive foreign-source income and suffers a net loss of $60,000 in the general limitation basket. What is the numerator of the FTC limitation formula for Youngster's passive basket in the current year?

Accepted Answer

A)   ($40,000) 
B)   $0
C)   $20,000
D)   $40,000E) A) and B)
F) C) and D)

Question 2

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Accepted Answer

A) True 
 B)False

Question 3

Foreign tax credit allowed when a foreign corporation makes a distribution to its parent corporation.

Accepted Answer

The answer of Foreign tax credit allowed when a foreign...

Question 4

Yvonne is a citizen of France 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. Current year - 150 days First prior year - 150 days Second prior year - 90 days
Is Yvonne treated as a U.S. resident for the current year?

Accepted Answer

A)   No, because Yvonne is a citizen of France.
B)   No, because Yvonne was not present in the United States at least 183 days during the current year.
C)   No, because although Yvonne 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.
D)   Yes, because Yvonne was present in the United States at least 31 days during the current year and 215 days during the current and prior two years (using the appropriate fractions for the prior years) .E) None of the above
F) All of the above

Question 5

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 foreign tax credit related to the Starke dividend?

Accepted Answer

A)   $22,500
B)   $56,250
C)   $150,000
D)   $750,000E) B) and D)
F) B) and C)

Question 6

GreenCo, a U.S. corporation, earns $25 million of taxable income from U.S. sources and $10 million of taxable income from foreign sources. What amount of taxable income does GreenCo report on its U.S. tax return?

Accepted Answer

A)   $25 million.
B)   $35 million.
C)   $25 million less any tax paid on the foreign income.
D)   $35 million less any tax paid on U.S. income.E) A) and C)
F) A) and B)

Question 7

Foreign taxpayers earning income inside the United States.

Accepted Answer

The answer of Foreign taxpayers earning income inside the United...

Question 8

Britta, Inc., a U.S. corporation, reports foreign-source income and pays foreign taxes as follows.
  Britta's worldwide taxable income is $1,600,000 and U.S. taxes before FTC are $560,000 (assume a 35% tax rate). What is Britta's U.S. tax liability after the FTC?

Accepted Answer

The FTC is computed separately for both ...

Question 9

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

Question 10

A non­U.S. citizen who holds a "green card."

Accepted Answer

The answer of A non­U.S. citizen who holds a "green...

Question 11

Qwan, a U.S. corporation, reports $250,000 interest expense for the tax year. None of the interest relates to nonrecourse debt or loans from affiliated corporations. Qwan's U.S. and foreign assets are reported as follows.  How should Qwan assign its interest expense between U.S. and foreign sources to maximize its FTC for the current year?

Accepted Answer

A)   Using tax book values.
B)   Using tax book value for U.S. source and fair market value for foreign source.
C)   Using fair market values.
D)   Using fair market value for U.S. source and tax book value for foreign source.E) B) and C)
F) All of the above

Question 12

Flapp Corporation, a U.S. corporation, conducts all of its transactions in the U.S. dollar. It sells inventory for $1 million to a Canadian company when the exchange rate is $1US: $1.2Can. The Canadian company pays for the inventory when the exchange rate is $1US: $1.25Can. What is Flapp's exchange gain or loss on this sale?

Accepted Answer

A)   Flapp does not have a foreign currency exchange gain or loss, since it conducts all of its transactions in the U.S. dollar.
B)   Flapp's account receivable for the sale is $1 million (when the exchange rate is $1US: $1.2Can.)  and it collects on the receivable when the exchange rate is $1US: $1.25Can. Flapp has an exchange gain of $50,000.
C)   Flapp's account receivable for the sale is $1 million (when the exchange rate is $1US: $1.2Can.) . It collects on the receivable at $1US: $1.25Can. Flapp has an exchange loss of $5,000.
D)   Flapp's foreign currency exchange loss is $50,000.E) A) and B)
F) All of the above

Question 13

Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Accepted Answer

The answer of Foreign tax credit allowed for withholding taxes...

Question 14

Which of the following situations requires the filing of an information return with the U.S. government?

Accepted Answer

A)   A domestic corporation that is 25% or more foreign owned.
B)   A foreign corporation carrying on a trade or business in the United States.
C)   U.S. persons who acquire or dispose of an interest in a foreign partnership.
D)   All of the above.
E)   None of the above.F) D) and E)
G) B) and D)

Question 15

An advance pricing agreement (APA)  is used between:

Accepted Answer

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)

Question 16

Generally, accrued foreign income taxes are translated at the:

Accepted Answer

A)   Exchange rate when the taxes are paid.
B)   Exchange rate on the date when the taxes are accrued.
C)   Average exchange rate for the tax year to which the taxes relate.
D)   Average exchange rate for the last five tax years.E) A) and B)
F) All of the above

Question 17

Upon repatriation to a CFC, it does not create dividend income.

Accepted Answer

The answer of Upon repatriation to a CFC, it does...

Exam 9: Taxation of International Transactions

Youngster, Inc., a U.S. corporation, earns $20,000 in passive foreign-source income and suffers a net loss of $60,000 in the general limitation basket. What is the numerator of the FTC limitation formula for Youngster's passive basket in the current year?

Correct Answer
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Upon repatriation to a CFC, it does not create dividend income.

Correct Answer
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A nonU.S. citizen who holds a "green card."

Correct Answer
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Britta, Inc., a U.S. corporation, reports foreign-source income and pays foreign taxes as follows. Britta's worldwide taxable income is $1,600,000 and U.S. taxes before FTC are $560,000 (assume a 35% tax rate). What is Britta's U.S. tax liability after the FTC?

Correct Answer
verified
The FTC is computed separately for both ...
View 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 Answer
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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 foreign tax credit related to the Starke dividend?

Correct Answer
verified

Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Correct Answer
verified

Foreign tax credit allowed when a foreign corporation makes a distribution to its parent corporation.

Correct Answer
verified

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Correct Answer
verified

Foreign taxpayers earning income inside the United States.

Correct Answer
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Generally, accrued foreign income taxes are translated at the:

Correct Answer
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Correct Answer
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Which of the following situations requires the filing of an information return with the U.S. government?

Correct Answer
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An advance pricing agreement (APA) is used between:

Correct Answer
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Correct Answer
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GreenCo, a U.S. corporation, earns $25 million of taxable income from U.S. sources and $10 million of taxable income from foreign sources. What amount of taxable income does GreenCo report on its U.S. tax return?

Correct Answer
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Exam 9: Taxation of International Transactions

Youngster, Inc., a U.S. corporation, earns $20,000 in passive foreign-source income and suffers a net loss of $60,000 in the general limitation basket. What is the numerator of the FTC limitation formula for Youngster's passive basket in the current year?

Correct AnswerverifiedShow Answer

Upon repatriation to a CFC, it does not create dividend income.

Correct AnswerverifiedShow Answer

A non­U.S. citizen who holds a "green card."

Correct AnswerverifiedShow Answer

Britta, Inc., a U.S. corporation, reports foreign-source income and pays foreign taxes as follows. Britta's worldwide taxable income is $1,600,000 and U.S. taxes before FTC are $560,000 (assume a 35% tax rate). What is Britta's U.S. tax liability after the FTC?

Correct AnswerverifiedThe FTC is computed separately for both ...View AnswerShow 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 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 foreign tax credit related to the Starke dividend?

Correct AnswerverifiedShow Answer

Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Correct AnswerverifiedShow Answer

Foreign tax credit allowed when a foreign corporation makes a distribution to its parent corporation.

Correct AnswerverifiedShow Answer

The purpose of the transfer pricing rules is to ensure that taxpayers have ultimate flexibility in shifting profits between related entities.

Correct AnswerverifiedShow Answer

Foreign taxpayers earning income inside the United States.

Correct AnswerverifiedShow Answer

Generally, accrued foreign income taxes are translated at the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following situations requires the filing of an information return with the U.S. government?

Correct AnswerverifiedShow Answer

An advance pricing agreement (APA) is used between:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

GreenCo, a U.S. corporation, earns $25 million of taxable income from U.S. sources and $10 million of taxable income from foreign sources. What amount of taxable income does GreenCo report on its U.S. tax return?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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A nonU.S. citizen who holds a "green card."

Correct Answer
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Correct Answer
verified
The FTC is computed separately for both ...
View Answer

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Correct Answer
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