Question 1

Income tax treaties provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S.statutory law.

Accepted Answer

A) True 
 B)False

Question 2

Twenty unrelated U.S.persons equally own all of the stock of Quigley, a foreign corporation.Quigley is a CFC.

Accepted Answer

A) True 
 B)False

Question 3

General Corporation is taxable in a number of states.This year, General made a $100,000 sale from its A headquarters to a customer in B.This activity is not sufficient for General to create nexus with B.State A applies a throwback rule, but State B does not.In which state(s)  will the sale be included in the sales factor numerator?

Accepted Answer

A)  $0 in both A and B.
B)  $100,000 in A.
C)  $100,000 in B.
D)  In both A and B, according to the apportionment formulas of each.E) All of the above
F) C) and D)

Question 4

Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

Accepted Answer

A)  A non-U.S.person's effectively connected U.S.business income is taxed by the U.S.only if it is portfolio income.
B)  A non-U.S.person's effectively connected U.S.business income is subject to U.S.income taxation.
C)  A non-U.S.person may earn income from selling U.S.real property without incurring any U.S.income tax.
D)  A non-U.S.person must spend at least 183 days in the United States before any effectively connected income is subject to U.S.taxation.E) B) and D)
F) A) and C)

Question 5

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.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

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.   Fair market value  U.S. assets $5,000,000 Foreign assets $10,000,000 Tax book value:  U.S. assets $2,000,000 Foreign assets $6,000,000\begin{array}{l}	ext { Fair market value }\\begin{array} { l l } 	ext { U.S. assets } & \$ 5,000,000 \	ext { Foreign assets } & \$ 10,000,000 \	ext { Tax book value: } & \	ext { U.S. assets } & \$ 2,000,000 \	ext { Foreign assets } & \$ 6,000,000\end{array}\end{array} Fair market value  U.S. assets  Foreign assets  Tax book value:  U.S. assets  Foreign assets ​$5,000,000$10,000,000$2,000,000$6,000,000​​  ? 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) All of the above
F) None of the above

Question 8

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

Accepted Answer

A)  Purchase of inventory from unrelated U.S.person and sale outside the CFC country.
B)  Purchase of inventory from a related U.S.person and sale outside the CFC country.
C)  Services performed for the U.S.parent in a country in which the CFC was organized.
D)  Services performed on behalf of an unrelated party in a country outside the country in which the CFC was organized.E) All of the above
F) B) and C)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Performance, Inc., a U.S.corporation, owns 100% of Krumb, Ltd., a foreign corporation.Krumb earns only general basket income.During the current year, Krumb paid Performance a $200,000 dividend.The foreign tax credit associated with this dividend is $30,000.The foreign jurisdiction requires a withholding tax of 30%, so Performance received only $140,000 in cash as a result of the dividend.What is Performance's total U.S.gross income reported as a result of the $140,000 cash received?

Accepted Answer

A)  $30,000
B)  $140,000
C)  $200,000
D)  $230,000E) A) and C)
F) A) and B)

Question 11

Which of the following is not a U.S.person?

Accepted Answer

A)  Domestic corporation.
B)  Citizen of Turkey with U.S.permanent residence status (i.e., green card) .
C)  U.S.corporation 100% owned by a foreign corporation.
D)  Foreign corporation 100% owned by a domestic corporation.E) B) and C)
F) A) and D)

Question 12

Compute Still Corporation's State Q taxable income and tax liability for the year. $$\begin{array} { l r } 
\text { Addition modifications } & \$ 70,000 \
\text { Allocated income - total } & \$ 80,000 \
\text { Allocated income - State Q } & \$ 60,000 \
\text { Allocated income - State P } & \$ 20,000 \
\text { Apportionment percentage - State Q } & 40 \% \
\text { Federal taxable income } & \$ 500,000 \
\text { State tax credits } & \$ 11,000 \
\text { Subtraction modifications } & \$ 30,000 \
\text { Tax rate } & 5 \%
\end{array}$$

Accepted Answer

State Q taxable inco...

Question 13

A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?

Accepted Answer

A)  Non-U.S.persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S.trade or business.
B)  Non-U.S.persons are subject to U.S.income or withholding tax only if they are engaged in a U.S.trade or business.
C)  Non-U.S.persons are not taxed on gains from U.S.real property as long as such property is not used in a U.S.trade or business.
D)  Once a non-U.S.person is engaged in a U.S.trade or business, the non-U.S.person's worldwide income is subject to U.S.taxation.E) A) and B)
F) A) and C)

Question 15

A domestic corporation is one whose assets are primarily located in the U.S.For this purpose, the primarily located test (>50%) applies.

Accepted Answer

A) True 
 B)False

Question 16

Most states begin the computation of corporate taxable income with an amount from the Federal income tax return.

Accepted Answer

A) True 
 B)False

Question 17

Section 482 is used by the Treasury to:

Accepted Answer

A)  Force taxpayers to use arms-length transfer pricing on transactions between related parties.
B)  Reallocate income, deductions, etc., to a related taxpayer to minimize tax liability.
C)  Increase information that is reported about U.S.corporations with non-U.S.owners.
D)  All of the above.
E)  None of the above.F) C) and E)
G) All of the above

Question 18

USCo, a U.S.corporation, purchases inventory from distributors within the U.S.and resells this inventory to customers outside the U.S., with title passing outside the U.S.Profit on the sale is $10,000.What is the source of the USCo's inventory sales income?

Accepted Answer

A)  $5,000 U.S.source and $5,000 foreign source.
B)  $5,000 U.S.source and $5,000 sourced based on location of the pertinent manufacturing assets.
C)  $10,000 U.S.source.
D)  $10,000 foreign source.E) All of the above
F) A) and D)

Question 19

A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly, indirectly, and constructively at least 50% of the voting power of a foreign corporation.

Accepted Answer

A) True 
 B)False

Question 20

The throwback rule requires that:

Accepted Answer

A)  Sales of tangible personal property are attributed to the state where they originated, if the taxpayer is not taxable in the state of destination.
B)  When an asset is sold, any recognized gain from depreciation recapture is taxed at the rates that applied when the depreciation deductions were claimed.
C)  Sales of services are attributed to the state of the seller's domicile.
D)  Capital gain/loss is attributed to the state of the seller's domicile.E) A) and C)
F) A) and D)

Exam 16: Multi-Juris-Dictional Taxation

A domestic corporation is one whose assets are primarily located in the U.S.For this purpose, the primarily located test (>50%) applies.

Correct Answer
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Correct Answer
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State Q taxable inco...
View Answer

Correct Answer
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Most states begin the computation of corporate taxable income with an amount from the Federal income tax return.

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

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
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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.

Correct Answer
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Correct Answer
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Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

Correct Answer
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Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?

Correct Answer
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A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly, indirectly, and constructively at least 50% of the voting power of a foreign corporation.

Correct Answer
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Correct Answer
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The throwback rule requires that:

Correct Answer
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USCo, a U.S.corporation, purchases inventory from distributors within the U.S.and resells this inventory to customers outside the U.S., with title passing outside the U.S.Profit on the sale is $10,000.What is the source of the USCo's inventory sales income?

Correct Answer
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Which of the following is not a U.S.person?

Correct Answer
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A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.

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

Correct Answer
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Section 482 is used by the Treasury to:

Correct Answer
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Income tax treaties provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S.statutory law.

Correct Answer
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Twenty unrelated U.S.persons equally own all of the stock of Quigley, a foreign corporation.Quigley is a CFC.

Correct Answer
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Exam 16: Multi-Juris-Dictional Taxation

A domestic corporation is one whose assets are primarily located in the U.S.For this purpose, the primarily located test (>50%) applies.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedState Q taxable inco...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Most states begin the computation of corporate taxable income with an amount from the Federal income tax return.

Correct AnswerverifiedShow Answer

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

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

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

Correct AnswerverifiedShow Answer

Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?

Correct AnswerverifiedShow Answer

A "U.S.shareholder" for purposes of CFC classification is any U.S.person who owns directly, indirectly, and constructively at least 50% of the voting power of a foreign corporation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The throwback rule requires that:

Correct AnswerverifiedShow Answer

USCo, a U.S.corporation, purchases inventory from distributors within the U.S.and resells this inventory to customers outside the U.S., with title passing outside the U.S.Profit on the sale is $10,000.What is the source of the USCo's inventory sales income?

Correct AnswerverifiedShow Answer

Which of the following is not a U.S.person?

Correct AnswerverifiedShow Answer

A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Section 482 is used by the Treasury to:

Correct AnswerverifiedShow Answer

Income tax treaties provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S.statutory law.

Correct AnswerverifiedShow Answer

Twenty unrelated U.S.persons equally own all of the stock of Quigley, a foreign corporation.Quigley is a CFC.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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State Q taxable inco...
View Answer

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