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Law question data bank




Question;876. Question TF #1;The United States has income tax treaties with only members of the European;Union.;a.;True;b. False;877. Question TF #2;Income tax treaties may provide for either higher or lower withholding tax;rates on interest income than the rate provided under U.S. statutory law.;a.;True;b. False;878. Question TF #3;Interest paid to an unrelated party by a domestic corporation that historically;earns 75% of its gross income each year from the conduct of an active trade or;business outside the United States is foreign-source income.;a.;True;b. False;879. Question TF #4;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;880. Question TF #5;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;881. Question TF #6;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;882. Question TF #7;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;883. Question TF #8;In all cases, the ?residence of seller? rule is used in determining the;sourcing of income.;a.;True;b. False;884. Question TF #9;A U.S. business conducts international communications activities between the;U.S. and Spain. The resulting income is sourced 100% in the United States.;a.;True;b. False;885. Question TF #10;Losses and deductions, similar to income items, can be U.S.- or foreign-source.;a.;True;b. False;886. Question TF #11;In allocating interest expense between U.S. and foreign sources, a taxpayer;must use the tax basis of the income-producing assets.;a.;True;b. False;887. Question TF #12;The IRS can use ? 482 reallocations to assure that transactions between related;parties are properly reflected in a tax return.;a.;True;b. False;888. Question TF #13;A Qualified Business Unit of a U.S. corporation that operates in Germany;generally uses the Euro as its functional currency.;a.;True;b. False;889. Question TF #14;Gain or loss on the exchange of foreign currency is considered separately from;the underlying transaction (e.g., the purchase or sale of goods).;a.;True;b. False;890. Question TF #15;LocalCo merges into HeirCo, a non-U.S. entity, in a transaction that would;qualify as a ?Type A? reorganization. The resulting realized gain is;tax-deferred under U.S. income tax law, using ?? 351 and 368.;a.;True;b. False;891. Question TF #16;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.;a.;True;b. False;892. Question TF #17;?Inbound? and ?offshore? transfers are exempt from taxation under ? 367.;a.;True;b. False;893. Question TF #18;A ?U.S. shareholder? for purposes of CFC classification is any U.S. person who;owns directly, indirectly, or constructively at least 10% of the voting power;or value of a foreign corporation.;a.;True;b. False;894. Question TF #19;Twelve unrelated U.S. persons own a foreign corporation equally. The foreign;corporation is a CFC.;a.;True;b. False;895. Question TF #20;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.;a.;True;b. False;896. Question TF #21;Kipp, a U.S. shareholder under the CFC provisions, owns 40% of a CFC. If the;CFC?s Subpart F income for the taxable year is $200,000, Kipp is not taxed on;receipt of a constructive dividend of $80,000 because he doesn?t own more than;50% of the CFC.;a.;True;b. False;897. Question TF #22;ForCo, a foreign corporation, purchases widgets from USCo, Inc., its U.S.;parent corporation. The widgets are sold by ForCo to another unrelated foreign;corporation in the same country as ForCo. The income from sale of the widgets;by ForCo is not Subpart F foreign base company sales income.;a.;True;b. False;898. Question TF #23;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;899. Question TF #24;Subpart F income includes portfolio income like dividends and interest.;a.;True;b. False;900. Question TF #25;Jokerz, a CFC of a U.S. parent, generated $80,000 of Subpart F foreign base company;services income in its first year of operations. The next year, Jokerz;distributes $50,000 cash to the parent, from those service profits. The parent;is taxed on $80,000 in the first year and $50,000 in the second year.;a.;True;b. False;901. Question TF #26;U.S. individuals who receive dividends from foreign corporations may claim the;deemed-paid foreign tax credit related to such dividends.;a.;True;b. False;902. Question TF #27;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;903. Question TF #28;Collins, Inc. received gross foreign-source dividend income of $250,000.;Foreign taxes withheld on the dividend were $25,000 and no ? 902 credit is;available. Its worldwide taxable income for the tax year is $500,000. U.S. tax;before the FTC is $175,000. Collins? current year FTC is $87,500.;a.;True;b. False;904. Question TF #29;Waltz, Inc., a U.S. taxpayer, pays foreign taxes of $50,000 on foreign-source;general basket income of $90,000. Waltz?s worldwide taxable income is $450,000;on which it owes U.S. taxes of $157,500 before FTC. Waltz?s FTC is $50,000.;a.;True;b. False;905. Question TF #30;Unused foreign tax credits are carried back one year and then forward 10 years.;a.;True;b. False;906. Question TF #31;Foreign-source losses within a separate income basket are allocated directly;against U.S.-source income without regard to income in other baskets.;a.;True;b. False;907. Question TF #32;A U.S. taxpayer may take a current FTC equal to the greater of the FTC limit or;the actual foreign taxes (direct or indirect) paid or accrued.;a.;True;b. False;908. Question TF #33;A nonresident alien is defined as someone who is not a citizen or resident of;the U.S.;a.;True;b. False;909. Question TF #34;All of an NRA?s U.S.-source income that is not effectively connected with a;U.S. trade or business is subject to a flat U.S. income tax rate of 30%, unless;the tax rate is modified by a treaty.;a.;True;b. False;910. Question TF #35;A nonresident alien with U.S.-source income effectively connected with a U.S.;trade or business can take effectively connected deductions against that;income.;a.;True;b. False;911. Question TF #36;A domestic corporation is one whose;assets are primarily (> 50%) located in the U.S.;a.;True;b. False;912. Question TF #37;If a foreign corporation?s U.S. effectively connected earnings for the taxable;year are $900,000 and its net equity has increased by $40,000, its dividend;equivalent amount is $940,000.;a.;True;b. False;913. Question TF #38;Gains on the sale of U.S. real property held directly or indirectly through;U.S. stock ownership by NRAs and foreign corporations are subject to taxation;under FIRPTA.;a.;True;b. False;914. Question TF #39;Disposition of stock of a domestic corporation that is a real property holding;corporation is subject to tax under FIRPTA.;a.;True;b. False;915. Question TF #40;The purpose of the transfer pricing rules is to ensure that taxpayers have;ultimate flexibility in shifting profits between related entities.;a.;True;b. False;916. Question TF #41;An appropriate transfer price is one that considers the risks, assets, and;functions of the persons to whom income is assigned.;a.;True;b. False;917. Question TF #42;The U.S. system for taxing income earned outside its borders by U.S. persons is;referred to as the territorialapproach;because only income earned within the U.S. border is subject to taxation.;a.;True;b. False;918. Question TF #43;The U.S. system for taxing income earned inside its borders by non-U.S. persons;is referred to as inbound taxation;because such foreign persons are earning income by coming into the United;States.;a.;True;b. False


Paper#59229 | Written in 18-Jul-2015

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