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Exam 16: Multijurisdictional Taxation

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Question 71

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Julio, a nonresident alien, realizes a gain on the sale of commercial real estate located in Omaha.The real estate was sold to Mariana, Julio's cousin who is also a nonresident alien.Julio recognizes foreign-source income from the sale because his home country is not the U.S.

A) True
B) False

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Question 72

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Jaime received gross foreign-source dividend income of $250,000.Foreign taxes withheld on the dividend were $25,000.Jaime's total U.S.tax liability is $840,000 the 21% marginal tax rate applies).Jaime's current year FTC is $87,500.

A) True
B) False

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Question 73

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Match each of the following items with the appropriate description, in applying the P.L.86-272 definition of solicitation. -Training administrative personnel to use an update to ordering software.

Zhang, an NRA who is not a resident of a treaty country, receives taxable dividends of $50,000 from U.S.corporations.Zhang does not conduct a U.S.trade or business.Zhang's dividends are subject to withholding by the payor of:

Hendricks Corporation sells widgets in two states.State A levies a 9% effective tax rate, and State B levies a 3% rate.A and B have adopted sales-factor-only apportionment formulas.To reduce overall multistate income tax liabilities, Hendricks should:

Milt Corporation owns and operates two facilities that manufacture paper products.One of the facilities is located in State D, and the other is located in State E.Milt generated $1,200,000 of taxable income, comprised of $1,000,000 of income from its manufacturing facilities and a $200,000 gain from the sale of nonbusiness property located in E.E does not distinguish between business and nonbusiness property.D apportions business income.Milt's activities within the two states are outlined below. Both D and E utilize a three-factor apportionment formula, under which sales, property, and payroll are equally weighted.Determine the amount of Milt's income that is subject to income tax by each state.

For most taxpayers, which of the traditional apportionment factors yields the greatest opportunities for tax reduction?

In states, an) election permits a multinational corporation to elect to limit the reach of the state's taxing jurisdiction to activities occurring within the boundaries of the United States.

Which of the following statements regarding the U.S.taxation of non-U.S.persons is true?

In determining state taxable income, all of the following are adjustments to Federal income except:

OutCo, a controlled foreign corporation in Meena located outside the U.S.) , earns $600,000 in net interest and dividend income from investments in the bonds and stock of unrelated companies.All of the dividend payors are located in Meena.OutCo's Subpart F income for the year is:

Twenty unrelated U.S.persons equally own all of the stock of Quigley, a foreign corporation.Quigley is a CFC.

Match each of the following items with the appropriate description, in applying the P.L.86-272 definition of solicitation. -Owning a tablet computer that is used on sales trips to the state.

Discuss the primary purposes of income tax treaties.

Which of the following is not a foreign person?

In working with the foreign tax credit, a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

A typical state taxable income addition modification is for the state's NOL allowed the taxpayer for the tax year.

Dark, Inc., a U.S.corporation, operates Dunkel, an unincorporated branch manufacturing operation in Germany.Dark reports $100,000 of taxable income from Dunkel on its U.S.tax return, along with $400,000 of taxable income from its U.S.operations.Dark paid $30,000 in German income taxes related to the $100,000 of Dunkel income.Assuming a U.S.tax rate of 21%, what is Dark's U.S.tax liability after any allowable foreign tax credits?

In the apportionment formula, most states assign more than a one-third weight to the factor.

Match each of the following terms with the appropriate description, in the state income tax formula.Apply the UDITPA rules in your responses. -Treasury Bond interest income.