Question 1

An assembly worker earns a $50,000 salary and receives a fringe benefit package worth $15,000.The payroll factor assigns $65,000 for this employee.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

Accepted Answer

A)   Because the inventory is manufactured in the U.S. ,all of the inventory income is U.S.source.
B)   If title passes on the inventory outside the U.S. ,all of the inventory income is foreign source.
C)   The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on where the sale negotiation takes place.
D)   The taxpayer may use the 50-50 method to source one-half the income based on title passage and one-half the income based on location of production assets.E) All of the above
F) A) and B)

Question 3

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) B) and D)
G) C) and E)

Question 4

The U.S.system for taxing income earned outside its borders by U.S.persons is referred to as the territorial approach,because only income earned within the U.S.border is subject to taxation.

Accepted Answer

A) True 
 B)False

Question 5

In allocating interest expense between U.S.and foreign sources,a taxpayer elects to use either the tax basis of the income-producing assets or their fair market values.

Accepted Answer

A) True 
 B)False

Question 6

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) C) and E)
G) A) and B)

Question 7

State Q wants to increase its income tax collections,but politically it would be unwise to raise taxes on in-state individuals or businesses.Q currently follows all UDITPA rules and employs an equally weighted three-factor apportionment formula.Q allocates nonbusiness income amounts.
Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.

Accepted Answer

∙Over-weighting the sales factor.
∙Sales...

Question 8

Which of the following statements regarding income sourcing is not correct?

Accepted Answer

A)   U.S.persons benefit from earning low-tax foreign-source income.
B)   Foreign persons generally benefit from avoiding U.S.-source income classification.
C)   U.S.persons are not concerned with source of income because all their income is subject to U.S.tax under a worldwide system.
D)   Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States.E) B) and C)
F) A) and B)

Question 9

All of the U.S.states have adopted a tax based on the net taxable income of corporations.

Accepted Answer

A) True 
 B)False

Question 10

The U.S.system for taxing income earned inside its borders by non-U.S.persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

Accepted Answer

A) True 
 B)False

Question 11

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Accepted Answer

A) True 
 B)False

Question 12

A tax haven often is:

Accepted Answer

A)   A country with high internal income taxes.
B)   A country with no or low internal income taxes.
C)   A country without income tax treaties.
D)   A country that prohibits "treaty shopping."E) A) and D)
F) A) and C)

Question 13

A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.

Accepted Answer

A) True 
 B)False

Question 14

In which of the following independent situations would Slane,a foreign corporation,be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen,10% by Kathy,12% by Leslie,10% by David,8% by Ben,and 48% by Mike.

Accepted Answer

A)   Jen,Kathy,Leslie,David,Ben,and Mike are all U.S.citizens.
B)   Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.David is married to Kathy.Mike is a foreign resident and citizen.
C)   Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.Ben is Mike's son.Mike is a foreign resident and citizen.
D)   Jen,Kathy,Leslie,David,and Ben are all U.S.citizens.Mike is a foreign resident and citizen.E) B) and D)
F) B) and C)

Question 15

U.S.income tax treaties typically:

Accepted Answer

A)   Provide for taxation exclusively by the source country.
B)   Provide for taxation exclusively by the country of residence.
C)   Provide rules by which multinational taxpayers avoid double taxation.
D)   Provide that the country with the highest tax rate will be allowed exclusive tax collection rights.E) A) and B)
F) B) and C)

Question 16

The throwback rule requires that:

Accepted Answer

A)   Sales of tangible personal property are attributed to the state where they originated,if the taxpayer is not taxable in the state of destination.
B)   Sales of tangible personal property are attributed to the seller's state,even if the taxpayer is not taxable in the state of destination.
C)   Sales of services are attributed to the state of commercial domicile.
D)   Capital gain/loss is attributed to the state of commercial domicile.E) C) and D)
F) A) and C)

Question 17

Bryden,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.Bryden's current year E & P is $350,000,and its accumulated E & P is $15 million.What is the current year Subpart F deemed dividend to USCo?

Accepted Answer

A)   $350,000
B)   $550,000
C)   $900,000
D)   $15 millionE) A) and D)
F) A) and B)

Question 18

The property factor includes business assets that the taxpayer owns,but also those merely used under a lease agreement.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 16: Multijurisdictional Taxation

The property factor includes business assets that the taxpayer owns,but also those merely used under a lease agreement.

Correct Answer
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Bryden,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.Bryden's current year E & P is $350,000,and its accumulated E & P is $15 million.What is the current year Subpart F deemed dividend to USCo?

Correct Answer
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All of the U.S.states have adopted a tax based on the net taxable income of corporations.

Correct Answer
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The U.S.system for taxing income earned outside its borders by U.S.persons is referred to as the territorial approach,because only income earned within the U.S.border is subject to taxation.

Correct Answer
verified

Section 482 is used by the Treasury to:

Correct Answer
verified

Correct Answer
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∙Over-weighting the sales factor.
∙Sales...
View Answer

A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

Correct Answer
verified

The throwback rule requires that:

Correct Answer
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In allocating interest expense between U.S.and foreign sources,a taxpayer elects to use either the tax basis of the income-producing assets or their fair market values.

Correct Answer
verified

A tax haven often is:

Correct Answer
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U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Correct Answer
verified

U.S.income tax treaties typically:

Correct Answer
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The U.S.system for taxing income earned inside its borders by non-U.S.persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

Correct Answer
verified

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

Correct Answer
verified

An assembly worker earns a $50,000 salary and receives a fringe benefit package worth $15,000.The payroll factor assigns $65,000 for this employee.

Correct Answer
verified

In which of the following independent situations would Slane,a foreign corporation,be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen,10% by Kathy,12% by Leslie,10% by David,8% by Ben,and 48% by Mike.

Correct Answer
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Correct Answer
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Which of the following statements regarding income sourcing is not correct?

Correct Answer
verified

Exam 16: Multijurisdictional Taxation

The property factor includes business assets that the taxpayer owns,but also those merely used under a lease agreement.

Correct AnswerverifiedShow Answer

Bryden,a controlled foreign corporation owned 100% by USCo,earned $900,000 in Subpart F income for the current year.Bryden's current year E & P is $350,000,and its accumulated E & P is $15 million.What is the current year Subpart F deemed dividend to USCo?

Correct AnswerverifiedShow Answer

All of the U.S.states have adopted a tax based on the net taxable income of corporations.

Correct AnswerverifiedShow Answer

The U.S.system for taxing income earned outside its borders by U.S.persons is referred to as the territorial approach,because only income earned within the U.S.border is subject to taxation.

Correct AnswerverifiedShow Answer

Section 482 is used by the Treasury to:

Correct AnswerverifiedShow Answer

Correct Answerverified∙Over-weighting the sales factor.∙Sales...View AnswerShow Answer

A unitary group of entities files a combined return that includes all of the affiliates' income and apportionment data.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is true,concerning the sourcing of income from inventory produced by the taxpayer in the U.S.and sold outside the U.S.?

Correct AnswerverifiedShow Answer

The throwback rule requires that:

Correct AnswerverifiedShow Answer

In allocating interest expense between U.S.and foreign sources,a taxpayer elects to use either the tax basis of the income-producing assets or their fair market values.

Correct AnswerverifiedShow Answer

A tax haven often is:

Correct AnswerverifiedShow Answer

U.S.individuals who receive dividends from foreign corporations may claim the deemed-paid foreign tax credit related to such dividends.

Correct AnswerverifiedShow Answer

U.S.income tax treaties typically:

Correct AnswerverifiedShow Answer

The U.S.system for taxing income earned inside its borders by non-U.S.persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

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

An assembly worker earns a $50,000 salary and receives a fringe benefit package worth $15,000.The payroll factor assigns $65,000 for this employee.

Correct AnswerverifiedShow Answer

In which of the following independent situations would Slane,a foreign corporation,be classified as a controlled foreign corporation? The Slane stock is directly owned 12% by Jen,10% by Kathy,12% by Leslie,10% by David,8% by Ben,and 48% by Mike.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements regarding income sourcing is not correct?

Correct AnswerverifiedShow Answer

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∙Over-weighting the sales factor.
∙Sales...
View Answer

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