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| 1 | |
"Outbound taxation" deals with the U.S. tax rules that apply to U.S. persons doing business outside the United States. |
| | A) | True |
| | B) | False |
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| 2 | |
A U.S. citizen earns $10,000 of interest income from her bank account in Switzerland. The interest income will not be subject to U.S. income taxation because it is considered foreign source income. |
| | A) | True |
| | B) | False |
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| 3 | |
A citizen of Mexico will only be subject to U.S. taxation if she spends 183 days or more in the United States during the current year. |
| | A) | True |
| | B) | False |
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| 4 | |
A U.S. corporation can claim a foreign tax credit on its U.S. tax return for all foreign taxes paid or accrued during the year. |
| | A) | True |
| | B) | False |
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| 5 | |
A U.S. corporation's gross profit from sale of inventory it manufactures in the United States will be treated entirely as U.S. source income regardless of where title to the inventory passes to the buyer. |
| | A) | True |
| | B) | False |
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| 6 | |
One of the goals of an income tax treaty between the United States and other countries is to reduce the withholding taxes imposed on cross-border payments such as dividends, interest, and royalties. |
| | A) | True |
| | B) | False |
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| 7 | |
An individual owning 100 percent of a Dutch corporation will be eligible for a deemed paid foreign tax credit on dividends received from the corporation. |
| | A) | True |
| | B) | False |
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| 8 | |
Subpart F of the Internal Revenue Code was enacted to prevent the deferral of U.S. taxation on certain types of passive income earned by foreign corporations controlled by U.S. shareholders. |
| | A) | True |
| | B) | False |
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| 9 | |
Philippe was physically present in the United States for 110 days in 2013, 180 days in 2012, and 120 days in 2011. Under the substantial presence test formula, how many days is Philippe deemed physically present in the United States in 2013 for purposes of determining if he is a resident alien? |
| | A) | 0 |
| | B) | 110 |
| | C) | 190 |
| | D) | 360 |
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| 10 | |
Leland Corporation has a precredit U.S. tax of $340,000 on $1,000,000 of taxable income in 2013. Leland has $400,000 of foreign source taxable income and paid $160,000 of foreign income taxes on this income. All of the foreign source income is treated as general category income for foreign tax credit purposes. What is the maximum amount of foreign tax credit that Leland can claim on its 2013 U.S. income tax return? |
| | A) | $0 |
| | B) | $64,000 |
| | C) | $136,000 |
| | D) | $160,000 |
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| 11 | |
Maria, a Mexican citizen and resident, received the following investment income during 2013: $1,000 of dividend income from ownership of stock in a U.S. corporation, $2,000 interest from a bond issued by a U.S. corporation, $3,000 of rental income from property located in the United States, and $500 capital gain from sale of a stock in a U.S. corporation. How much of Maria's income will be subject to U.S. taxation in 2013? |
| | A) | $6,500 |
| | B) | $6,000 |
| | C) | $4,000 |
| | D) | $0 |
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| 12 | |
Michigan Corporation manufactured inventory in the United States and sold the inventory to customers in Canada. Gross profit from sale of the inventory was $500,000. Title to the inventory passed FOB: Destination. How much of the gross profit is treated as foreign source income for purposes of computing Michigan's foreign tax credit in the current year? |
| | A) | $0 |
| | B) | $250,000 |
| | C) | $500,000 |
| | D) | The answer cannot be determined with the information provided. |
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| 13 | |
Eiffel Corporation is a 100 percent owned French subsidiary of Tower Corporation, a U.S. corporation. Eiffel has post-1986 earnings and profits of €5,000,000 and post-1986 foreign taxes of $2,250,000 as of the end of the current year. During the current year, Eiffel paid a dividend of €500,000 to Tower. Assume an exchange rate of €1 = $1.50. Compute the tax consequences to Tower as a result of this dividend. |
| | A) | Taxable income of $750,000 and a deemed paid credit of $225,000 |
| | B) | Taxable income of $975,000 and a deemed paid credit of $225,000 |
| | C) | Taxable income of $750,000 and a deemed paid credit of $0 |
| | D) | Taxable income of $975,000 and a deemed paid credit of $0 |
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| 14 | |
Orleans Corporation, a U.S. corporation, reported U.S. taxable income of $2,000,000 and incurred a precredit U.S. tax of $680,000. Included in the computation of taxable income was a $350,000 dividend from a wholly-owned Irish subsidiary. The dividend brought with it a deemed paid credit of $50,000. In addition, a withholding tax of $17,500 was imposed on the dividend. What is Orleans net U.S. tax liability? |
| | A) | $680,000 |
| | B) | $662,500 |
| | C) | $630,000 |
| | D) | $612,500 |
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| 15 | |
Which of the following persons is not a "U.S. shareholder" of a controlled foreign corporation (CFC) for subpart F purposes? |
| | A) | A U.S. corporation owning 25 percent of the CFC |
| | B) | A U.S. citizen owning 10 percent of the CFC |
| | C) | A U.S. citizen owning 5 percent of the CFC |
| | D) | A U.S. trust owning 10 percent of the CFC |
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