Question 1

Performance,Inc.,a U.S.corporation,owns 100% of Krumb,Ltd.,a foreign corporation.Krumb earns only general limitation income.During the current year,Krumb paid Performance a $200,000 dividend.The § 902 credit associated with this dividend is $30,000.The foreign jurisdiction requires a withholding tax of 30%,so Performance received only $140,000 in cash as a result of the dividend.What is Performance's total U.S.gross income reported as a result of the $140,000 cash dividend received?

Accepted Answer

The gross dividend income is before the withholding tax ($60,000)and after the gross-up (add back)of the § 902 credit.Thus,the gross income is $200,000 plus $30,000,or $230,000.

Question 2

Match the definition with the correct term.
a.Indirect credit
b.Direct credit
c.10 percent
d.50 percent
e.Section 78
f.Two
g.
Six
h.
Overall foreign loss
-Foreign tax credit allowed for income taxes paid by foreign corporation.

Accepted Answer

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

Question 3

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-U.S.taxpayers earning income outside the United States.

Accepted Answer

Outbound activities refer to U.S. taxpayers or businesses earning income outside the United States, as it involves the movement of funds or income from the U.S. to other countries.

Question 4

Match the definition with the correct term.
a.Foreign base company income
b.Foreign personal holding company income
c.U.S. shareholder
d.Previously taxed income
e.De minimis rule
f.Passive foreign investment company
-Passive type income treated as Subpart F income.

Accepted Answer

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

Question 5

Match the definition with the correct term.
a.Foreign base company income
b.Foreign personal holding company income
c.U.S. shareholder
d.Previously taxed income
e.De minimis rule
f.Passive foreign investment company
-Earnings already taxed to a U.S.shareholder of a controlled foreign corporation.

Accepted Answer

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

Question 6

Match the definition with the correct term.
a.Indirect credit
b.Direct credit
c.10 percent
d.50 percent
e.Section 78
f.Two
g.
Six
h.
Overall foreign loss
-Maximum percentage of overall foreign loss that must be recaptured in any one year.

Accepted Answer

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

Question 7

Match the definition with the correct term.
a.Foreign base company income
b.Foreign personal holding company income
c.U.S. shareholder
d.Previously taxed income
e.De minimis rule
f.Passive foreign investment company
-Type of entity that removes deferral benefit other than a controlled foreign corporation.

Accepted Answer

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

Question 8

Match the definition with the correct term.
a.Indirect credit
b.Direct credit
c.10 percent
d.50 percent
e.Section 78
f.Two
g.
Six
h.
Overall foreign loss
-Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Accepted Answer

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

Question 9

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-A portion of a business that accounts for profits and losses using its functional currency.

Accepted Answer

The answer of Match the definition with the correct term.
a.
Inbound
b.
Section...

Question 10

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-Bilateral agreement between two countries related to tax issues.

Accepted Answer

An income tax treaty is a bilateral agreement between two countries that addresses tax issues related to cross-border transactions and aims to avoid double taxation of income.

Question 11

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-Statutory rule related to transfer pricing.

Accepted Answer

The answer of Match the definition with the correct term.
a.
Inbound
b.
Section...

Question 12

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-Method for assigning deductions to correct source.

Accepted Answer

The answer of Match the definition with the correct term.
a.
Inbound
b.
Section...

Question 13

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-Foreign taxpayers earning income inside the United States.

Accepted Answer

Inbound taxation refers to the tax principles and regulations that apply to foreign individuals or entities earning income within a country, in this case, the United States.

Question 14

Match the definition with the correct term.
a.Indirect credit
b.Direct credit
c.10 percent
d.50 percent
e.Section 78
f.Two
g.
Six
h.
Overall foreign loss
-Direct ownership level before a deemed paid foreign tax credit is allowed a U.S.owner of foreign corporation.

Accepted Answer

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

Question 15

Match the definition with the correct term.
a.Foreign base company income
b.Foreign personal holding company income
c.U.S. shareholder
d.Previously taxed income
e.De minimis rule
f.Passive foreign investment company
-Income that tends to lack any true economic connection to the country of a CFC's organization.

Accepted Answer

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

Question 16

Match the definition with the correct term.
a.
Inbound
b.
Section 482
c.
Tax haven
d.
Qualified business unit
e.
Outbound
f.
Income tax treaty
g.
Allocation and apportionment
-A country with very low or no income tax.

Accepted Answer

A tax haven is a country or jurisdiction with very low or no income tax rates, making it attractive for individuals and businesses seeking to reduce their tax liabilities.

Question 17

Wallack,Inc.,a U.S.corporation,owns 100% of Orion,Ltd.,a foreign corporation.Orion earns only general limitation income.During the current year,Orion paid Wallack a $5,000 dividend. The § 902 credit associated with this dividend is $3,000.The foreign jurisdiction requires a withholding tax of 10%,so Wallack received only $4,500 in cash as a result of the dividend.What is Wallack's total U.S.gross income reported as a result of the $4,500 cash dividend received?

Accepted Answer

The gross dividend income is before the withholding tax ($500)and after the gross-up (add back)of the § 902 credit.Thus,the gross income is $5,000 plus $3,000,or $8,000.

Question 18

Match the definition with the correct term.
a.Foreign base company income
b.Foreign personal holding company income
c.U.S. shareholder
d.Previously taxed income
e.De minimis rule
f.Passive foreign investment company
-Owner of shares counted in determining whether a foreign corporation is a controlled foreign corporation.

Accepted Answer

A U.S. shareholder is defined as a U.S. person who owns, directly or indirectly, 10% or more of the total combined voting power of all classes of stock of a foreign corporation. This definition is crucial in determining whether a foreign corporation is a controlled foreign corporation (CFC), as the ownership percentage of U.S. shareholders is a key factor.

Question 19

Match the definition with the correct term.
a.Foreign base company income
b.Foreign personal holding company income
c.U.S. shareholder
d.Previously taxed income
e.De minimis rule
f.Passive foreign investment company
-Exception that allows a controlled foreign corporation to earn small amounts of Subpart F income.

Accepted Answer

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

Question 20

Match the definition with the correct term.
a.Indirect credit
b.Direct credit
c.10 percent
d.50 percent
e.Section 78
f.Two
g.
Six
h.
Overall foreign loss
-Requirement that the amount of any deemed paid foreign tax credit be included in gross income.

Accepted Answer

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

Quiz 9: Taxation of International Transactions

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -Foreign tax credit allowed for income taxes paid by foreign corporation.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -U.S.taxpayers earning income outside the United States.

Match the definition with the correct term. a.Foreign base company income b.Foreign personal holding company income c.U.S. shareholder d.Previously taxed income e.De minimis rule f.Passive foreign investment company -Passive type income treated as Subpart F income.

Match the definition with the correct term. a.Foreign base company income b.Foreign personal holding company income c.U.S. shareholder d.Previously taxed income e.De minimis rule f.Passive foreign investment company -Earnings already taxed to a U.S.shareholder of a controlled foreign corporation.

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -Maximum percentage of overall foreign loss that must be recaptured in any one year.

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -Foreign tax credit allowed for withholding taxes on payments from foreign sources.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -A portion of a business that accounts for profits and losses using its functional currency.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -Bilateral agreement between two countries related to tax issues.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -Statutory rule related to transfer pricing.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -Method for assigning deductions to correct source.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -Foreign taxpayers earning income inside the United States.

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -Direct ownership level before a deemed paid foreign tax credit is allowed a U.S.owner of foreign corporation.

Match the definition with the correct term. a. Inbound b. Section 482 c. Tax haven d. Qualified business unit e. Outbound f. Income tax treaty g. Allocation and apportionment -A country with very low or no income tax.

Match the definition with the correct term. a.Indirect credit b.Direct credit c.10 percent d.50 percent e.Section 78 f.Two g. Six h. Overall foreign loss -Requirement that the amount of any deemed paid foreign tax credit be included in gross income.