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Exam 25: Taxation of International Transactions

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Question 81

Multiple Choice

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A tax haven often is:

A) A country with high internal taxes.
B) A country without income tax treaties.
C) A country with no or low internal taxes.
D) A country that prohibits "treaty shopping."
E) None of the above statements is true.

F) B) and D)
G) B) and C)

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Question 82

True/False

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ForCo,a subsidiary of a U.S.corporation incorporated in Belgium,manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany.The income from the sale of widgets is not Subpart F foreign base company sales income.

A) True
B) False

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Question 83

Multiple Choice

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GreenCo,a domestic corporation,earns $25 million of taxable income from U.S.sources and $5 million of taxable income from foreign sources.What amount of taxable income does GreenCo report on its U.S.tax return?

Which of the following persons typically is not concerned with the U.S.-sourcing rules for gross income?

Which of the following statements regarding the taxation of U.S.real property gains recognized by foreign persons not engaged in a U.S.trade or business is false? Gains from the disposition of U.S.real property are:

Given the following information,determine whether Greta,an alien,is a U.S.resident for 2012.Assume that Greta cannot establish a tax home in or a closer connection to a foreign country.

Which of the following is a special tax regime imposed on certain foreign persons engaged in a U.S.trade or business?

With respect to income generated by non-U.S.persons,does the U.S.apply a "worldwide" or a "territorial" approach.Be specific.

Which of the following is not a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

In all cases,the "residence of seller" rule is used in determining the sourcing of income.

Certain portfolio income items (i.e.,foreign personal holding company income)is included under the tax rules as Subpart F income for controlled foreign corporations ( CFCs).What is the rationale for taxing these income items? Include two examples of foreign personal holding company income.

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?

A U.S.business conducts international communications activities between the U.S.and Spain.The resulting income is sourced 100% in the United States.

Losses and deductions,similar to income items,can be U.S.- or foreign-source.

Peanut,Inc.,a domestic corporation,receives $500,000 of foreign-source interest income on which foreign taxes of $5,000 are withheld.Its worldwide taxable income is $900,000,and U.S.tax liability before FTC is $315,000.What is Peanut's foreign tax credit?