Question 1

Section 482 is used by the Treasury to:

Accepted Answer

A)  Force taxpayers to use arms-length transfer pricing on transactions between related parties.
B)  Reallocate income, deductions, etc., to a related taxpayer to minimize tax liability.
C)  Increase information that is reported about U.S.corporations with non-U.S.owners.
D)  All of the above.
E)  None of the above.F) A) and B)
G) A) and C)

Question 2

Kunst, a U.S.corporation, generates $100,000 of foreign-source income in the general income basket and $40,000 of foreign-source income in the passive income basket.Kunst's worldwide taxable income is $1,200,000, and its U.S.tax liability before FTC is $420,000.Foreign taxes attributable to the general income basket are $60,000 and to the passive income are $4,000.What is Kunst's foreign tax credit for the tax year?

Accepted Answer

A)  $64,000
B)  $39,000
C)  $35,000
D)  $4,000E) C) and D)
F) A) and C)

Question 3

What is the significance of the term nexus when discussing state income taxation?

Accepted Answer

A U.S.state cannot levy an income tax on...

Question 4

Which of the following statements is false in regard to the U.S.income tax treaty program?

Accepted Answer

A)  There are about 70 bilateral income tax treaties between the U.S.and other countries.
B)  Tax treaties generally provide for primary taxing rights that require the other treaty partner to allow a credit for the taxes paid on the twice-taxed income.
C)  U.S.income tax treaties are written to set up a "network" of up to five foreign countries that are covered by the treaty language.
D)  None of the above statements is false.E) A) and B)
F) A) and C)

Question 5

In determining taxable income for state income tax purposes, interest income from another state's bonds typically constitutes an) modification.

Accepted Answer

The answer of In determining taxable income for state income...

Question 6

The sourcing rules of Federal income taxation apply to deductions as well as to income items.

Accepted Answer

A) True 
 B)False

Question 7

The property factor includes land and buildings used for business purposes.

Accepted Answer

A) True 
 B)False

Question 8

A U.S.taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes direct or indirect) paid or accrued.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  Non-U.S.persons never are subject to U.S.income tax.
B)  Non-U.S.persons are subject to U.S.income tax only on gains from U.S.real property.
C)  Non-U.S.persons can be subject to a withholding tax on U.S.-source portfolio income.
D)  Non-U.S.persons can be subject to a withholding tax on foreign-source portfolio income.E) B) and D)
F) A) and B)

Question 10

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

Accepted Answer

A)  Interest on U.S.obligations.
B)  Expenses that are directly or indirectly related to state and municipal interest that is taxable for state purposes.
C)  The amount by which the state depreciation deduction exceeds the corresponding Federal amount.
D)  The amount by which the Federal depreciation deduction exceeds the corresponding state amount.E) A) and B)
F) A) and C)

Question 11

USCo, a U.S.corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld.Its worldwide taxable income is $1,500,000 and its U.S.tax liability before the foreign tax credit is $315,000.What is USCo's allowed foreign tax credit?

Accepted Answer

A)  $70,000
B)  $147,000
C)  $315,000
D)  $385,000E) B) and D)
F) B) and C)

Question 12

Roughly five percent of all taxes paid by businesses in the U.S.are to state, local, and municipal jurisdictions.

Accepted Answer

A) True 
 B)False

Question 13

If a state follows Federal income tax rules, the state's tax compliance and enforcement become easier to accomplish.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?

Accepted Answer

A)  Non-U.S.persons may be subject to withholding tax on U.S.-source investment income even if not engaged in a U.S.trade or business.
B)  Non-U.S.persons are subject to U.S.income or withholding tax only if they are engaged in a U.S.trade or business.
C)  Non-U.S.persons are not taxed on gains from U.S.real property as long as such property is not used in a U.S.trade or business.
D)  Once a non-U.S.person is engaged in a U.S.trade or business, the non-U.S.person's worldwide income is subject to U.S.taxation.E) A) and C)
F) A) and B)

Question 15

Typical indicators of income-tax nexus include the presence of customers in the state.

Accepted Answer

A) True 
 B)False

Question 16

When a is in effect, out-of-state sales that are not subject to tax in the destination state are pulled back into the sales factor numerator of the origination state.

Accepted Answer

The answer of When a is in effect, out-of-state sales...

Question 17

Overall tax liabilities typically increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.

Accepted Answer

The answer of Overall tax liabilities typically increase/decrease) if the...

Question 18

Which of the following is not a U.S.person?

Accepted Answer

A)  Domestic corporation.
B)  Citizen of Turkey with U.S.permanent residence status i.e., green card) .
C)  U.S.corporation 100% owned by a foreign corporation.
D)  Foreign corporation 100% owned by a domestic corporation.E) B) and C)
F) B) and D)

Question 19

Adams Corporation owns and operates two manufacturing facilities, one in State X and the other in State Y.Due to a temporary decline in the corporation's sales, Adams has rented 20% of its Y facility to an unaffiliated corporation.Adams generated $1,000,000 net rental income and $5,000,000 income from manufacturing. Adams is incorporated in Y.For X and Y purposes, rental income is classified as allocable nonbusiness income.By applying the statutes of each state, Adams determined that its apportionment factors are .65 for X and .35 for Y.
Adams's income attributed to X is:

Accepted Answer

A)  $0.
B)  $3,250,000.
C)  $3,900,000.
D)  $5,000,000.
E)  $6,000,000.F) All of the above
G) A) and E)

Question 20

A state can levy an income tax on a business only if the business was incorporated in the state.

Accepted Answer

A) True 
 B)False

Exam 16: Multijurisdictional Taxation

USCo, a U.S.corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld.Its worldwide taxable income is $1,500,000 and its U.S.tax liability before the foreign tax credit is $315,000.What is USCo's allowed foreign tax credit?

Correct Answer
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In determining taxable income for state income tax purposes, interest income from another state's bonds typically constitutes an) modification.

Correct Answer
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Which of the following is not a U.S.person?

Correct Answer
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A state can levy an income tax on a business only if the business was incorporated in the state.

Correct Answer
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The sourcing rules of Federal income taxation apply to deductions as well as to income items.

Correct Answer
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Section 482 is used by the Treasury to:

Correct Answer
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Overall tax liabilities typically increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.

Correct Answer
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In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

Correct Answer
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Roughly five percent of all taxes paid by businesses in the U.S.are to state, local, and municipal jurisdictions.

Correct Answer
verified

When a is in effect, out-of-state sales that are not subject to tax in the destination state are pulled back into the sales factor numerator of the origination state.

Correct Answer
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Which of the following statements is false in regard to the U.S.income tax treaty program?

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

Correct Answer
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What is the significance of the term nexus when discussing state income taxation?

Correct Answer
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A U.S.state cannot levy an income tax on...
View Answer

Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?

Correct Answer
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The property factor includes land and buildings used for business purposes.

Correct Answer
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A U.S.taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes direct or indirect) paid or accrued.

Correct Answer
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Typical indicators of income-tax nexus include the presence of customers in the state.

Correct Answer
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If a state follows Federal income tax rules, the state's tax compliance and enforcement become easier to accomplish.

Correct Answer
verified

Exam 16: Multijurisdictional Taxation

USCo, a U.S.corporation, receives $700,000 of foreign-source passive income on which foreign taxes of $70,000 are withheld.Its worldwide taxable income is $1,500,000 and its U.S.tax liability before the foreign tax credit is $315,000.What is USCo's allowed foreign tax credit?

Correct AnswerverifiedShow Answer

In determining taxable income for state income tax purposes, interest income from another state's bonds typically constitutes an) modification.

Correct AnswerverifiedShow Answer

Which of the following is not a U.S.person?

Correct AnswerverifiedShow Answer

A state can levy an income tax on a business only if the business was incorporated in the state.

Correct AnswerverifiedShow Answer

The sourcing rules of Federal income taxation apply to deductions as well as to income items.

Correct AnswerverifiedShow Answer

Section 482 is used by the Treasury to:

Correct AnswerverifiedShow Answer

Overall tax liabilities typically increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.

Correct AnswerverifiedShow Answer

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

Correct AnswerverifiedShow Answer

Roughly five percent of all taxes paid by businesses in the U.S.are to state, local, and municipal jurisdictions.

Correct AnswerverifiedShow Answer

When a is in effect, out-of-state sales that are not subject to tax in the destination state are pulled back into the sales factor numerator of the origination state.

Correct AnswerverifiedShow Answer

Which of the following statements is false in regard to the U.S.income tax treaty program?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the significance of the term nexus when discussing state income taxation?

Correct AnswerverifiedA U.S.state cannot levy an income tax on...View AnswerShow Answer

Which of the following statements regarding a non-U.S.person's U.S.tax consequences is true?

Correct AnswerverifiedShow Answer

The property factor includes land and buildings used for business purposes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A U.S.taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes direct or indirect) paid or accrued.

Correct AnswerverifiedShow Answer

Typical indicators of income-tax nexus include the presence of customers in the state.

Correct AnswerverifiedShow Answer

If a state follows Federal income tax rules, the state's tax compliance and enforcement become easier to accomplish.

Correct AnswerverifiedShow Answer

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A U.S.state cannot levy an income tax on...
View Answer

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