Solved by verified expert :949. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #31
OutCo, a controlled foreign corporation, earns $600,000 in net interest and
dividend income from investments in the bonds and stock of unrelated companies.
All of the unrelated companies are located in OutCo’s country of incorporation.
OutCo’s Subpart F income for the year is:
a.
$0.
b. $0 only if OutCo is engaged in a
trade or business in its home country.
c. $600,000 only if OutCo is engaged in
a trade or business in its home country.
d. $600,000.
950. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #32
OutCo, a controlled foreign corporation owned 100% by USCo, earned $900,000 in
Subpart F income for the current year. OutCo’s current year E & P is
$250,000 and its accumulated E & P is $18 million. What is the current year
Subpart F deemed dividend to USCo?
a.
$250,000.
b. $650,000.
c. $900,000.
d. $18 million.
951. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #33
Peanut, Inc., a domestic corporation, receives $500,000 of foreign-source
interest income on which foreign taxes of $5,000 are withheld. Its worldwide
taxable income is $900,000, and U.S. tax liability before FTC is $315,000. What
is Peanut’s foreign tax credit?
a.
$500,000.
b. $315,000.
c. $175,000.
d. $5,000.
952. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #34
Abbott, Inc., a domestic corporation, reports worldwide taxable income of $8
million, including a $900,000 dividend from ForCo, a wholly-owned foreign
corporation. ForCo’s post-1986 undistributed E & P are $18 million and it
has paid $12 million of foreign income taxes attributable to these earnings. What
is Abbott’s deemed paid foreign tax credit related to the dividend received
(before consideration of any limitation)?
a.
$0.
b. $600,000.
c. $900,000.
d. $18 million.
953. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #35
Ridge, Inc., a domestic corporation, reports worldwide taxable income of
$800,000, including a $300,000 dividend from Emma, Inc., a foreign corporation.
Ridge’s U.S. tax liability before FTC is $280,000. Ridge owns 20% of Emma.
Emma’s post-1986 E & P after taxes is $8 million and it has paid foreign
taxes of $4 million attributable to that E & P. If Ridge elects the FTC,
its U.S. gross income with regard to the dividend from Emma is:
a.
$450,000.
b. $300,000.
c. $90,000.
d. $60,000.
954. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #36
Amber, Inc., a domestic corporation receives a $150,000 cash dividend from
Starke, Ltd. Amber owns 15% of Starke. Starke’s post-1986 E & P is $2
million and it has paid foreign taxes of $1 million attributable to that E
& P. What is Amber’s foreign tax credit related to the Starke dividend?
a.
$200,000.
b. $150,000.
c. $100,000.
d. $75,000.
955. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #37
Amber, Inc., a domestic corporation receives a $150,000 cash dividend from
Starke, Ltd. Amber owns 15% of Starke. Starke’s post-1986 E & P is $2
million and it has paid foreign taxes of $1 million attributable to that E
& P. What is Amber’s gross income related to the Starke dividend?
a.
$225,000.
b. $150,000.
c. $33,750.
d. $22,500.
956. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #38
Kilps, a U.S. corporation, receives a $200,000 dividend from a 20% owned
foreign corporation. The deemed-paid taxes attributable to this dividend are
$40,000 and foreign taxes withheld on remittance of the dividend are $30,000.
Kilps’s U.S. tax liability before the FTC is $350,000, the gross dividend
income is $240,000, and Kilps’s worldwide taxable income is $1 million. Kilps’s
foreign tax credit for the taxable year is:
a.
$84,000.
b. $70,000.
c. $40,000.
d. $30,000.
957. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #39
Which of the following is not a specific separate income “basket” for purposes
of the foreign tax credit limitation calculation?
a.
Business income.
b. Passive income.
c. Intangibles income.
d. None of the above are separate FTC
limitation baskets.
e. All of the above are separate FTC
limitation baskets.
958. CHAPTER
9—TAXATION OF INTERNATIONAL TRANSACTIONS Question MC #40
USCo, a domestic corporation, receives $100,000 of foreign-source income in the
general income basket and $40,000 of foreign-source income in the passive
income basket. Worldwide taxable income is $1,200,000 and the 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 USCo’s
foreign tax credit for the tax year?
a.
$39,000.
b. $64,000.
c. $60,000.
d. $4,000.
e. Some other amount.
