Which of the following tax benefits does not arise when a U.S. corporation forms a corporation in Ireland through which to earn business profits in Ireland?
A)Potential exemption of U.S. tax on income earned by the corporation.
B)Treaty benefits on cross-border payments between the Irish corporation and the U.S. corporation.
C)Use of transfer pricing to shift income between the United States and Ireland.
D)Flow-through of losses from the Irish corporation to the tax return of the U.S. corporation.

Question

Quizplus · Accepted Answer

The flow-through of losses from a foreign corporation (like an Irish corporation) to a U.S. corporation's tax return is generally not allowed under U.S. tax law. Foreign entities are typically treated as separate entities, and their losses are not directly deductible on the U.S. parent corporation's tax return.

Which of the Following Tax Benefits Does Not Arise When