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Which of the following is required in order for a transaction to be considered a corporate inversion?


A) A foreign corporation acquires substantially all of the assets of a U.S.corporation.
B) Former shareholders of the U.S.corporation own 80% or more of the stock in the foreign corporation by reason of their U.S.stock ownership.
C) The former U.S.company and its affiliates do not conduct substantial business in the foreign country of incorporation.
D) All of the above are required.

E) A) and D)
F) A) and C)

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Identify which of the following statements is true.


A) When a controlled foreign corporation (CFC) uses Subpart F income to invest in U.S.property,the investments are characterized as constructive distributions.
B) A controlled foreign corporation (CFC) can avoid the constructive dividend distribution resulting from investments in U.S.property if it invests in U.S.government obligations.
C) Distributions made by a controlled foreign corporation (CFC) are deemed to be paid first from tax-deferred earnings.
D) All of the above are false.

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

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U) S.Corporation,a domestic corporation,owns all of Foreign Corporation's stock.Foreign Corporation is incorporated in France.This year,Foreign Corporation reports $100,000 in aftertax profits in France,none of which is Subpart F income.U.S.Corporation


A) must include the $100,000 profit in its current-year U.S.tax return.
B) never has to include Foreign Corporation's profits in its U.S.tax return.
C) reports Foreign Corporation's profits in its U.S.tax return in the same manner it would if Foreign Corporation were instead a foreign branch.
D) must include Foreign Corporation's profits in its U.S.tax return when they are paid to U.S.Corporation in the form of a dividend.

E) U) and B)
F) A) and D)

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A foreign corporation is a CFC that is in its initial year of operation.For the current year,it reports $1 million of earnings and has an aggregate U.S.Property investment of $400,000.If none of the earnings qualified as Subpart F income,explain how the earnings are taxed.

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By making the $400,000 investm...

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Ashley,a U.S.citizen,works in England for part of the year.She earns $40,000 in England,paying $10,000 in income taxes to the British government.Her U.S.income is $60,000 and she pays $12,000 in U.S.taxes.Her taxes on her worldwide income are $20,000.What is Ashley's foreign tax credit? Assume she does not qualify for the foreign-earned income exclusion.


A) $8,000
B) $10,000
C) $12,000
D) none of the above

E) A) and D)
F) A) and C)

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U.S.citizens and resident aliens working abroad may qualify for the foreign-earned income exclusion of $97,600 in 2013.

A) True
B) False

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What is the branch profits tax? Explain the Congressional intent behind its enactment.

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The branch profits tax is imposed on the...

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Which of the following statements regarding inversions is incorrect?


A) The objective of an inversion is to avoid U.S.tax on worldwide income.
B) In an inversion,a U.S.corporation reorganizes as a foreign corporation.
C) The IRS will disregard the inversion if the former shareholders of the U.S.corporation continue to own 60% of the foreign corporation's stock.
D) The IRS will examine whether the foreign corporation conducts substantial business in the foreign country of incorporation to determine if the inversion is valid.

E) A) and B)
F) C) and D)

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Which of the following characteristics is not used by the U.S.government to determine the tax treatment accorded foreign-related transactions?


A) the taxpayer's country of citizenship
B) the taxpayer's country of residence
C) the taxpayer's type of business
D) the type of income earned

E) B) and D)
F) A) and B)

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A foreign corporation with a single class of stock is owned equally by Jericho Corporation,a U.S.corporation,and Joshua,a U.S.citizen.Joshua owns no Alpha Corporation stock.Is the foreign corporation a controlled foreign corporation (CFC)?

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Yes,the foreign corporation is...

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Explain the alternatives available to individual taxpayers for reporting foreign income taxes that have been paid or accrued.

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An annual election is available to indiv...

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U.S.shareholders are not taxed on dividends paid by a foreign subsidiary as long as the earnings are not remitted to them as dividends.

A) True
B) False

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Identify which of the following statements is true.


A) The losses of a foreign corporation that is 100% owned by a domestic corporation can be deducted by the domestic corporation to offset its gross income in the year incurred.
B) The deemed paid foreign tax credit was enacted so as not to discourage foreign direct investment through foreign branches.
C) A dividend remittance made by a noncontrolled foreign corporation is translated into U.S.dollars at the current exchange rate for the date the dividend is paid.
D) All of the above are false.

E) A) and B)
F) C) and D)

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A taxpayer may make the election to either deduct or take a credit for foreign income taxes


A) annually.
B) once every five years.
C) only once,and the election applies to all future tax years.
D) No election is available.

E) All of the above
F) A) and B)

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Identify which of the following statements is true.


A) Capital gains earned in the United States,other than in the conduct of a U.S.trade or business,are taxed to a nonresident alien only if the alien is physically present in the United States for at least 183 days during the tax year.
B) Aliens,who are U.S.residents,are taxed only on their U.S.income.
C) A nonresident alien from a nontreaty country is taxed at a 35% rate on U.S.source investment income without the benefit of any deductions.
D) All of the above are true.

E) A) and D)
F) None of the above

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In January of the current year,Stan Signowski's U.S.employer assigned him to their Paris office.This year,he earned salary,a cost-of-living allowance,a housing allowance,a home leave allowance that permits him to return home once each year,and an education allowance to pay for U.S.schooling for his son.Stan and his wife,Jennifer,have rented an apartment in Paris and paid French income taxes.What tax issues does Stan need to consider when preparing his tax return?

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•Is Stan Signowski eligible to claim the...

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A foreign corporation is owned by five unrelated individuals.John,Sam,and David are U.S.citizens who own 30%,18% and 9%,respectively,of the foreign corporation's single class of stock.Alberto and Manuel are nonresident aliens who own 37% and 6%,respectively,of the foreign corporation's stock.Which of the following statements is true?


A) There are three "U.S.shareholders" and the foreign corporation is a controlled foreign corporation (CFC) .
B) There are three "U.S.shareholders" and the foreign corporation is not a controlled foreign corporation (CFC) .
C) There are two "U.S.shareholders" and the foreign corporation is not a controlled foreign corporation (CFC) .
D) There are two "U.S.shareholders" and the foreign corporation is a controlled foreign corporation (CFC) .

E) A) and C)
F) A) and B)

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Identify which of the following statements is true.


A) U) S.citizens,resident aliens,and domestic corporations are taxed by the U.S.government on their worldwide income at regular U.S.tax rates.
B) Nonresident aliens and foreign corporations are not subject to U.S.taxation on their non-U.S.source investment income and part or all of their non-U.S.source trade or business income.
C) In a particular year,the overall foreign tax credit limitation permits a taxpayer to offset "excess" foreign taxes paid in one country against "excess" limitation amounts originating in other countries.
D) All of the above are true.

E) A) and D)
F) A) and B)

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Phoenix Corporation is a controlled foreign corporation (CFC) incorporated in Country X.It is 100% owned by its U.S parent corporation.Phoenix has $80,000 of taxable income from the sale of widgets that were purchased from their U.S.parent corporation.All widgets have the same gross profit.Sixty percent of the widgets were sold through a Country Y wholesaler that is 100% owned by Phoenix,and are destined for use in Country Y.The remaining 40% are sold through unrelated Country X wholesalers and are destined for use in Country X.What amount of profits will be constructively distributed as foreign- base company sales income to the U.S.parent company?


A) $0
B) $32,000
C) $48,000
D) $80,000

E) B) and C)
F) A) and B)

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Identify which of the following statements is true.


A) For a foreign corporation to be a controlled foreign corporation (CFC) ,more than 40% of its voting stock,or more than 40% of the value of its outstanding stock,must be owned by U.S.shareholders on any day of the corporation's tax year.
B) Under the Subpart F rules,controlled foreign corporations (CFCs) are required to distribute a certain portion of their income as dividends to their U.S.shareholders.
C) When a controlled foreign corporation (CFC) earns Subpart F income,such income is considered to be a constructive distribution to the CFC's U.S.shareholders on the last day of the CFC's tax year,or the last day on which CFC status is retained.
D) All of the above are true.

E) A) and D)
F) A) and C)

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