Adv Tax Chapter 24 Exam 2 Questions
With All Correct Answers.
In the international tax setting, when nexus is determined based on the geographic source of the income
that is known as: - Answer source-based jurisdiction
Mario, an Italian citizen and non-resident for US tax purposes, owns a condominium in New York City.
Although he bought it to have a place to stay when he visited New York, he has been renting it to tenants
for the last few years. Without an election, the income from the condo will be classified as: - Answer
fixed and determinable annual or periodic income
Ji, an international undergraduate student from China, has been in the US attending a university for over
350 days for each of the last four years (including this year). Under the substantial presence test, Ji will
be treated as a: - Answer non-resident
The foreign tax credit limitation is calculated as (Foreign source taxable income/total taxable income) x
U.S. tax on total taxable income. - Answer Precredit
Which of the following are reasons that a U.S. taxpayer might need to understand the income sourcing
rules? (Check all that apply.) - Answer To properly exclude foreign earned income when available under
the U.S. tax code
In order to properly calculate the foreign tax credit limitation
In order to determine the proper withholding on payments leaving the U.S.
The United States taxes ________ income of US residents. - Answer the worldwide
Klaus, a German citizen and non-resident for US tax purposes, owns a small business in New York City
that imports and sells accessories for various German-manufactured automobiles. Once a month, the
business pays its net profits back to Klaus in Germany. The income from this business will be classified as:
- Answer effectively connected income
, Herbert Tools, Inc. is incorporated in Bermuda. A wholly-owned subsidiary of Herbert, Stephanie Tools
Management, is located in Connecticut. Stephanie provides all of the headquarters functions for
Herbert. For US tax purposes, Herbert Inc. is a: - Answer non-resident
Goodbar Inc., a U.S. corporation recognized $400 of U.S.-sourced income and $600 foreign-sourced
income (all general category) from its branch in Tunisia. Goodbar has a 40% tax rate in the U.S. and a
45% tax rate (or $270) in Tunisia. What is Goodbar's foreign tax credit? - Answer 240
Dividends are generally sourced in a manner that is ______ how interest is sourced. - Answer the same
as
A US tax nonresident should consider US income sourcing rules because: - Answer only the US-sourced
income of a non-resident is subject to US taxes
Marco prepares a new advertising promotion for a client located in London. He spends 100 hours
working on the promotion in his office in New York and 50 hours working on the promotion in the
London offices of the client. He is paid $30,000 for his services by the client. How will Marco source the
compensation he receives? - Answer $20,000 U.S. and $10,000 UK, based on the time worked in each
location
Fixed and determinable, annual or periodic payment income - Answer Subject to withholding tax on
gross income
Subject to withholding tax on gross income
Effectively Connected Income - Answer Subject to net income taxation at U.S. graduated rates
Fixed and determinable, annual or periodic payment income
Claudio received his green card in October 20x1. Claudio will treated as a ______ in 20x1. - Answer Tax
resident
Interest is generally sourced from the jurisdiction in which the party _____ the interest resides. - Answer
paying
With All Correct Answers.
In the international tax setting, when nexus is determined based on the geographic source of the income
that is known as: - Answer source-based jurisdiction
Mario, an Italian citizen and non-resident for US tax purposes, owns a condominium in New York City.
Although he bought it to have a place to stay when he visited New York, he has been renting it to tenants
for the last few years. Without an election, the income from the condo will be classified as: - Answer
fixed and determinable annual or periodic income
Ji, an international undergraduate student from China, has been in the US attending a university for over
350 days for each of the last four years (including this year). Under the substantial presence test, Ji will
be treated as a: - Answer non-resident
The foreign tax credit limitation is calculated as (Foreign source taxable income/total taxable income) x
U.S. tax on total taxable income. - Answer Precredit
Which of the following are reasons that a U.S. taxpayer might need to understand the income sourcing
rules? (Check all that apply.) - Answer To properly exclude foreign earned income when available under
the U.S. tax code
In order to properly calculate the foreign tax credit limitation
In order to determine the proper withholding on payments leaving the U.S.
The United States taxes ________ income of US residents. - Answer the worldwide
Klaus, a German citizen and non-resident for US tax purposes, owns a small business in New York City
that imports and sells accessories for various German-manufactured automobiles. Once a month, the
business pays its net profits back to Klaus in Germany. The income from this business will be classified as:
- Answer effectively connected income
, Herbert Tools, Inc. is incorporated in Bermuda. A wholly-owned subsidiary of Herbert, Stephanie Tools
Management, is located in Connecticut. Stephanie provides all of the headquarters functions for
Herbert. For US tax purposes, Herbert Inc. is a: - Answer non-resident
Goodbar Inc., a U.S. corporation recognized $400 of U.S.-sourced income and $600 foreign-sourced
income (all general category) from its branch in Tunisia. Goodbar has a 40% tax rate in the U.S. and a
45% tax rate (or $270) in Tunisia. What is Goodbar's foreign tax credit? - Answer 240
Dividends are generally sourced in a manner that is ______ how interest is sourced. - Answer the same
as
A US tax nonresident should consider US income sourcing rules because: - Answer only the US-sourced
income of a non-resident is subject to US taxes
Marco prepares a new advertising promotion for a client located in London. He spends 100 hours
working on the promotion in his office in New York and 50 hours working on the promotion in the
London offices of the client. He is paid $30,000 for his services by the client. How will Marco source the
compensation he receives? - Answer $20,000 U.S. and $10,000 UK, based on the time worked in each
location
Fixed and determinable, annual or periodic payment income - Answer Subject to withholding tax on
gross income
Subject to withholding tax on gross income
Effectively Connected Income - Answer Subject to net income taxation at U.S. graduated rates
Fixed and determinable, annual or periodic payment income
Claudio received his green card in October 20x1. Claudio will treated as a ______ in 20x1. - Answer Tax
resident
Interest is generally sourced from the jurisdiction in which the party _____ the interest resides. - Answer
paying
