Question 1

Match the definition with the correct term.
-Bilateral agreement between two countries related to tax issues.

Accepted Answer

An income tax treaty is a bilateral agreement between two countries related to tax issues, including the avoidance of double taxation and the prevention of tax evasion.

Question 2

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-A deemed paid foreign tax credit is included in gross income.

Accepted Answer

The answer of Match the definition with the correct term....

Question 3

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Number of foreign tax credit limitation baskets.

Accepted Answer

The number of foreign tax credit limitation baskets is two, which is represented by choice letter D. The other choices are not relevant to this definition.

Question 4

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-A CFC's profits from sales of goods and services.

Accepted Answer

Foreign base company income refers to the profits of a CFC (controlled foreign corporation) from sales of goods and services.

Answer: C
 A CFC (controlled foreign corporation) refers to a foreign corporation in which more than 50 percent of the total combined voting power of all classes of stock is owned by U.S. shareholders (defined as U.S. persons owning 10% or more of the voting stock).

Answer: D
 U.S. shareholder refers to a U.S. person that owns 10% or more of the voting stock of a foreign corporation (including a CFC).

Answer: E
 Previously taxed income refers to earnings of a CFC that have already been subject to U.S. tax in the hands of its U.S. shareholders.

There is no match for B, F, or H.

Question 5

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

Accepted Answer

The answer of Match the definition with the correct term....

Question 6

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

Accepted Answer

The term "U.S. shareholder" refers to the owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation. The other terms do not match this definition.

Question 7

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-A net loss in all foreign tax credit limitation baskets.

Accepted Answer

The term that matches the definition of a net loss in all foreign tax credit limitation baskets is "overall foreign loss" (H). The other terms listed do not match this definition.

Question 8

Match the definition with the correct term.
-A business operation that accounts for profits and losses using its functional currency.

Accepted Answer

A Qualified Business Unit (QBU) is a separate and clearly identified unit of a trade or business that maintains separate books and records. It is relevant in accounting for profits and losses in the functional currency, which is the currency of the primary economic environment in which the business operates.

Question 9

Match the definition with the correct term.
-Method for sourcing income and deductions.

Accepted Answer

Allocation and apportionment refers to the method for sourcing income and deductions for tax purposes. It involves dividing income and expenses among different jurisdictions in order to determine the taxable income or loss for each jurisdiction.

Question 10

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Upon repatriation to a CFC, it does not create dividend income.

Accepted Answer

Previously taxed income (PTI) refers to earnings of a Controlled Foreign Corporation (CFC) that have already been taxed to the U.S. shareholder under the Subpart F or Global Intangible Low-Taxed Income (GILTI) provisions. Upon repatriation, these earnings do not create dividend income because they have already been included in the gross income of the U.S. shareholder.

Question 11

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Maximum years for a foreign tax credit carryforward.

Accepted Answer

The answer of Match the definition with the correct term....

Question 12

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Maximum years for a foreign tax credit carryback.

Accepted Answer

The maximum years for a foreign tax credit carryback is one year.

Question 13

Match the definition with the correct term.
-U.S. taxpayers earning income outside the United States.

Accepted Answer

Outbound refers to U.S. taxpayers earning income outside the United States.

A) Inbound refers to non-U.S. taxpayers earning income within the United States.
C) Allocation and apportionment refers to the process of dividing a company's income and expenses among different tax jurisdictions.
D) Qualified business unit refers to a separate and distinct unit of a multinational corporation that operates in a foreign country and has its own financial statements.
E) Tax haven refers to a country or jurisdiction that offers favorable tax treatment and is often used to minimize taxes.
F) Income tax treaty refers to an agreement between two or more countries that outlines how their residents will be taxed on cross-border income.
G) Section 482 refers to a U.S. tax law that allows the IRS to adjust the prices charged between related parties to ensure that income is not improperly shifted to lower-tax jurisdictions.

Question 14

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Accepted Answer

The definition matches with "direct credit" which is a type of foreign tax credit allowed for withholding taxes on payments from foreign sources.

Question 15

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Portfolio income treated as Subpart F income.

Accepted Answer

Foreign personal holding company income generally includes portfolio income treated as Subpart F income.

Answer: A 
 Foreign base company income is another category of income that can be subject to Subpart F rules.

Answer: C 
 Controlled foreign corporations (CFCs) are foreign corporations in which U.S. shareholders own more than 50 percent of the total combined voting power or value of the company's stock.

Answer: D 
 U.S. shareholders are individuals, corporations, partnerships, or other entities that own at least 10 percent of the total combined voting power of a foreign corporation.

Answer: E 
 Previously taxed income is income of a CFC that has been previously taxed as Subpart F income and is not subject to further taxation when distributed to U.S. shareholders.

Answer: None 
 There is no match for more than 80 percent or more than 10 percent.

Question 16

Match the definition with the correct term.
-A country with very low or no income tax.

Accepted Answer

A tax haven is a country or jurisdiction that has very low or no income tax, making it an attractive destination for businesses and individuals looking to minimize their tax liabilities.

Answer:F 
 An income tax treaty is an agreement between two countries that aims to prevent double taxation of income earned by individuals and businesses in both countries.

Answer:G 
 Section 482 of the US tax code allows the Internal Revenue Service (IRS) to make adjustments to the income or deductions of related parties in order to ensure that income is properly allocated and taxed.

The other choices are not related to the definition of a country with very low or no income tax.

Question 17

Match the definition with the correct term.
-Foreign taxpayers earning income inside the United States.

Accepted Answer

Inbound refers to foreign taxpayers earning income inside the United States.

Answer: B
 Outbound refers to U.S. taxpayers earning income outside the United States.

Answer: C
 Allocation and apportionment refers to the process of dividing a taxpayer's income between different tax jurisdictions based on factors such as sales, property ownership, and payroll.

Answer: D
 Qualified business unit refers to a separate and distinct business entity within a larger organization that is eligible to be taxed separately.

Answer: E
 Tax haven refers to a country or jurisdiction with very low or no taxes that is often used by taxpayers to minimize their tax liability.

Answer: F
 Income tax treaty refers to an agreement between two or more countries that outlines the rules for taxing international income and reducing double taxation.

Answer: G
 Section 482 refers to a provision of the Internal Revenue Code that allows the IRS to allocate income and expenses between related entities to prevent tax evasion or manipulation.

Question 18

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-Foreign tax credit allowed when a foreign corporation makes a distribution to its parent corporation.

Accepted Answer

The answer of Match the definition with the correct term....

Question 19

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once.
-A non-U.S. subsidiary whose income may be taxed to the U.S. parent before repatriation.

Accepted Answer

The definition matches with the term "controlled foreign corporation".

Question 20

Match the definition with the correct term.
-Treasury powers over transfer pricing.

Accepted Answer

Treasury powers over transfer pricing are regulated by Section 482 of the Internal Revenue Code.

Quiz 9: Taxation of International Transactions

Match the definition with the correct term. -Bilateral agreement between two countries related to tax issues.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -A deemed paid foreign tax credit is included in gross income.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Number of foreign tax credit limitation baskets.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -A CFC's profits from sales of goods and services.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -A net loss in all foreign tax credit limitation baskets.

Match the definition with the correct term. -A business operation that accounts for profits and losses using its functional currency.

Match the definition with the correct term. -Method for sourcing income and deductions.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Upon repatriation to a CFC, it does not create dividend income.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Maximum years for a foreign tax credit carryforward.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Maximum years for a foreign tax credit carryback.

Match the definition with the correct term. -U.S. taxpayers earning income outside the United States.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Portfolio income treated as Subpart F income.

Match the definition with the correct term. -A country with very low or no income tax.

Match the definition with the correct term. -Foreign taxpayers earning income inside the United States.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Foreign tax credit allowed when a foreign corporation makes a distribution to its parent corporation.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -A non-U.S. subsidiary whose income may be taxed to the U.S. parent before repatriation.

Match the definition with the correct term. -Treasury powers over transfer pricing.