Which of the following statements is true about U.S. taxation of foreign subsidiaries?
A) The U.S. income taxes income generated by subsidiaries incorporated in foreign countries.
B) U.S. multinationals do not pay tax on their worldwide income if incorporated in the U.S.
C) Transfer pricing will eliminate taxes by the U.S. government on multinational corporations.
D) U.S. tax on foreign operations does not have to be paid until the income is brought back to the U.S.

Question

Quizplus · Accepted Answer

The correct statement is that U.S. tax on foreign operations does not have to be paid until the income is brought back to the U.S. This is known as deferral and allows U.S. multinationals to delay the payment of U.S. taxes on foreign income until that income is repatriated back to the U.S.

Which of the Following Statements Is True About U