Question

1. Serena, a nonresident alien, is employed by GlobalCo, a non-U.S. corporation. She works in the United States for three days during the year, receiving a gross salary of $2,500 for this period. GlobalCo is not engaged in a U.S. trade or business. Under the commercial traveler exception, the $2,500 is not classified as U.S.-source income. TRUE OR FALSE

2. The IRS can use § 482 reallocations to ensure that transactions between related parties are properly reflected in a tax return. TRUE OR FALSE

3. A "U.S. shareholder" for purposes of CFC classification is any U.S. person who owns directly, indirectly, and constructively at least 50% of the voting power of a foreign corporation. TRUE OR FALSE

4. A U.S. taxpayer may take a current FTC equal to the greater of the FTC limit or the actual foreign taxes (direct or indirect) paid or accrued. TRUE OR FALSE

5. Without the foreign tax credit, double taxation would result when:

a.A foreign country taxes the foreign-source income of a nonresident alien.

b.The United States and a foreign country both tax the foreign-source income of a U.S. resident.

c.The United States taxes the U.S.-source income of a U.S. resident.

d.Terms of a tax treaty assign income taxing rights to the United States.

Answer 1