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Exam 9: Taxation of International Transactions

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Question 81

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Which of the following is a special tax regime imposed on certain foreign persons engaged in a U.S. trade or business?

A) Nondiscrimination tax.
B) Windfall U.S. profits tax.
C) Dividend repatriation tax.
D) Branch profits tax.

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

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Question 82

Multiple Choice

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ForCo, a foreign corporation not engaged in a U.S. trade or business, recognizes a $3 million gain from the sale of land located in the United States. The amount realized on the sale was $50 million. Absent any exceptions, what is the required withholding amount on the part of the purchaser of this land?

A) $0
B) $3 million
C) $300,000
D) $5 million

E) None of the above
F) All of the above

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Question 83

Multiple Choice

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Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation calculation?

ForCo, a non-U.S. corporation based in Aldonza, purchases widgets from USCo, Inc., its U.S. parent corporation. The widgets are sold by ForCo to an unrelated foreign corporation in Aldonza. The income from sale of the widgets by ForCo is Subpart F foreign base company sales income.

Present, Inc., a U.S. corporation, owns 60% of the stock of Past, Inc., a foreign corporation. For the current year, Present receives a dividend of $80,000 from Past. Past's pools of E & P (after taxes) and foreign taxes are $4,000,000 and $500,000, respectively. What is Present's total gross income from this dividend if it elects to claim the FTC for deemed-paid foreign taxes?

During the current year, USACo (a domestic corporation) sold equipment to FrenchCo, a foreign corporation, for $350,000, with title passing to the buyer in France. USACo purchased the equipment several years ago for $100,000 and took $80,000 of depreciation deductions on the equipment, all of which were allocated to U.S.-source income. USACo's adjusted basis in the equipment is $20,000 on the date of sale. What is the source of the $330,000 gain on the sale of this equipment?

Which of the following statements regarding the U.S. taxation of non-U.S. persons is true?

A Qualified Business Unit of a U.S. corporation that operates in Germany generally uses the Euro as its functional currency.

Which of the following is a principle used in applying the income-sourcing rules under U.S. tax law?

LocalCo merges into HeirCo, a non­U.S. entity, in a transaction that would qualify as a "Type A" reorganization. The resulting realized gain is tax­deferred under U.S. income tax law, using §§ 351 and 368.

Jaime received gross foreign-source dividend income of $250,000. Foreign taxes withheld on the dividend were $25,000. Jaime's total U.S. tax liability is $800,000 (the 35% marginal tax rate applies). Jaime's current year FTC is $87,500.

Which of the following persons typically is not concerned with the U.S.-sourcing rules for gross income?

Winnie, Inc., a U.S. corporation, receives a dividend of $400,000 from a non-CFC foreign corporation. Deemed- paid foreign taxes attributable to the dividend are $120,000. If Winnie elects the FTC, its gross income attributable to this dividend is $400,000.

Section 482 is used by the Treasury to:

A country with very low or no income tax.

Income of foreign person taxed through filing of a U.S. tax return with deductions allowed against gross income.

The "residence of seller" rule is used in determining the sourcing of all gross income and deductions of a U.S. multinational business.

A tax haven often is:

Number of foreign tax credit limitation baskets.

A non­U.S. individual's "green card" remains in effect until: