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Exam 13: The Us Taxation of Multinational Transactions

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Question 51

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Saginaw Steel Corporation has a precredit U.S. tax of $105,000 on $500,000 of taxable income. Saginaw has $200,000 of foreign source taxable income and paid $60,000 of income taxes to the German government on this income. All of the foreign source income is treated as foreign branch income for foreign tax credit purposes. Saginaw's foreign tax credit on its tax return will be:

A) $105,000
B) $60,000
C) $42,000
D) $24,000

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

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Question 52

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Before subpart F applies, a foreign corporation must be a CFC for how many consecutive days?

A) 1
B) 30
C) 183
D) 365

E) A) and B)
F) B) and C)

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Question 53

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Natsumi is a citizen and resident of Japan. She has a full-time job in Japan and has lived there with her family for the past 20 years. In 2017, Natsumi came to the United States on business and stayed for 240 days. She came to the United States again on business in 2018 and stayed for 120 days. In 2019 she came back to the United States on business and stayed for 120 days. Does Natsumi meet the U.S. statutory definition of a resident alien in 2019 under the substantial presence test?

Which statement best describes the U.S. framework for taxing multinational transactions?

Austin Corporation, a U.S. corporation, received the following investment income during the current year: $50,000 of dividend income from ownership of stock in a French corporation, $20,000 interest on a loan to its Dutch subsidiary, $40,000 royalty from its 50 percent owned Irish venture, and $30,000 capital gain from sale of its stock in a Brazilian corporation. How much of Austin's income is treated as foreign source?

Which of the following foreign taxes is not a creditable foreign tax for U.S. tax purposes?

A Japanese corporation owned by 11 U.S. individuals cannot be treated as a controlled foreign corporation for U.S. tax purposes.

Jimmy Johnson, a U.S. citizen, is employed by General Motors Corporation, a U.S. corporation. In June 2019, General Motors relocated Jimmy to its operations in Germany for the remainder of 2019. Jimmy was paid a salary of $250,000. As part of his compensation package for moving to Germany, Jimmy received a cost of living allowance of $30,000, which was paid to him only while he worked in Germany. Jimmy's salary was earned ratably over the 12-month period. During 2019 Jimmy worked 260 days, 130 of which were in Germany and 130 of which were in the United States. How much of Jimmy's total compensation is treated as foreign source income for 2019?

To be eligible for the "closer connection" exception to the physical presence test, an individual must be in the United States for less than how many days?