ACC 401 MCQs

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The United States generally taxes U.S. source fixed and determinable, annual or periodic income earned by non-U.S. persons by applying a withholding tax to the gross amount of income.
True
False
Philippe is a French citizen. During 2012 he spent 150 days in the United States on business. Because Philippe does not spend 183 days in the United States in 2012, he will not be treated as a resident alien for U.S. tax purposes.
True
False
U.S. individuals and corporations are eligible for a deemed-paid credit on dividends received from foreign corporations.
True
False
Subpart F income earned by a CFC will always be treated as a deemed dividend to the CFC’s U.S. shareholders in the year the subpart F income is earned.
True
False
Ames Corporation has a precredit U.S. tax of $340,000 on $1,000,000 of taxable income in 2012. Ames has $600,000 of foreign source taxable income and paid $120,000 of income taxes to the Australian government on this income. All of the foreign source income is treated as general category income for foreign tax credit purposes. Ames’s foreign tax credit on its 2012 tax return will be:
$72,000
$120,000
$204,000
$340,000
Orono Corporation manufactured inventory in the United States and sold the inventory to customers in Canada. Gross profit from the sale of the inventory was $300,000. Title to the inventory passed FOB: destination. How much of the gross profit is treated as foreign source income for purposes of computing the corporation’s foreign tax credit in the current year?
$300,000.
$150,000.
$0.
The answer cannot be determined with the information provided.
Which of the following expenses incurred by a U.S. corporation is not subject to special apportionment rules for foreign tax credit purposes?
Interest
Research and experimental
Advertising
State and local income taxes
U.S. corporation reports its foreign tax credit computation on which tax form?
Form 1116
Form 1118
Form 1120
Form 8832
Which of the following tax or non-tax benefits does not arise when a U.S. corporation forms a hybrid entity in Germany through which to earn business profits in Germany and elects to have the entity treated as a branch for U.S. tax purposes?
Potential deferral of U.S. tax on income earned by the corporation
Flow-through of losses from the German corporation to the tax return of the U.S. corporation
Limited liability to the U.S. corporation for acts committed by the hybrid entity
Free transferability of the stock of the hybrid entity by the U.S. corporation
What form is used by a U.S. corporation to “check-the-box” to elect the U.S. tax consequences of forming a hybrid entity outside the United States?
Form 1118
Form 1120
Form 8832
Form 8833
The Federal transfer taxes are calculated using cumulative lifetime transfers.
True
False
The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.
True
False
A present interest is the right to currently enjoy property or receive income payments from property.
True
False
Adjusted taxable gifts are included when calculating the taxable estate but are not subject to double taxation because a tax credit is provided for taxes payable on adjusted taxable gifts.
True
False
At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a true statement about Trevor’s estate or estate tax?
Trevor must have a taxable estate of at least $4 million.
Trevor must have an adjusted gross estate of at least $4 million.
Trevor must have an estate tax base (cumulative taxable transfers) of at least $4 million.
Trevor must have a gross estate of at least $4 million.
None of these is necessarily true.
At her death Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship. Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000. What amount, if any, is included in Siena’s gross estate?
$50,000.
$125,000.
$80,000.
$100,000.
None of these is correct.
The executor of Isabella’s estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella’s estate can deduct in computing the adjusted gross estate?
$32,000.
$37,000.
$56,000.
$61,000.
None of these.
Which of the following is a true statement about the Federal gift tax return (Form 709)?
Form 709 is due by the 15th day of the ninth month following the date of the gift.
Form 709 must be filed if a taxpayer wishes to elect gift splitting.
Form 709 need not be filed unless a taxpayer’s taxable gifts exceed the exemption equivalent.
Form 709 is due nine months after the death of the decedent.
None of these is true.

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