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Sample of included problems: (There are a total of 54 problems, all correct answers are given) ...
1) GreenCo, a domestic corporation, earns $25 million of taxable income from U.S. sources and $5 million of taxable income from foreign sources. What amount of taxable income does GreenCo report on its U.S. tax return?
A) $25 million
B) $30 million
C) $25 million less any tax paid on U.S. income
D) $30 million less any tax paid on the foreign income
2) Without the foreign tax credit, double taxation would result when:
A) The United States taxes the U.S.-source income of a U.S. resident
B) The United States and a foreign country both tax the foreign-source income of a U.S. resident
C) A foreign country taxes the foreign-source income of a nonresident alien
D) Only the United States taxes the foreign-source income of a U.S. resident (e.g., a treaty prevents foreign taxation)
3) U.S. income tax treaties:
A) Provide for primary taxation with a tax credit for income sourced in one country and earned by a resident of the other treaty country
B) Provide for taxation exclusively by the source country
C) Provide that the country with the highest tax rate will be allowed exclusive tax collection
D) Provide for taxation exclusively by the country of residence
4) Which of the following statements is false in regard to the U.S. income tax treaty program?
A) There are over 50 income tax treaties between the U.S. and other countries.
B) For the most part, neither country is prohibited from taxing the income of its residents
C) The treaties generally provide for primary taxing rights that require the other treaty partner to allow a credit for the taxes paid on the twice-taxed income
D) Residence of the taxpayer is an important consideration, while the presence of a permanent establishment is not
E) None of the above statements is false
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Solution Summary
The solution provides the correct answers for all 54 questions included on a sample taxation practice test. The first few questions begin as follows:
1) GreenCo, a domestic corporation, earns $25 million of taxable income from U.S. sources and $5 million of taxable income from foreign sources. What amount of taxable income does GreenCo report on its U.S. tax return?
A) $25 million
B) $30 million
C) $25 million less any tax paid on U.S. income
D) $30 million less any tax paid on the foreign income
2) Without the foreign tax credit, double taxation would result when:
A) The United States taxes the U.S.-source income of a U.S. resident
B) The United States and a foreign country both tax the foreign-source income of a U.S. resident
C) A foreign country taxes the foreign-source income of a nonresident alien
D) Only the United States taxes the foreign-source income of a U.S. resident (e.g., a treaty prevents foreign taxation)
3) U.S. income tax treaties:
A) Provide for primary taxation with a tax credit for income sourced in one country and earned by a resident of the other treaty country
B) Provide for taxation exclusively by the source country
C) Provide that the country with the highest tax rate will be allowed exclusive tax collection
D) Provide for taxation exclusively by the country of residence
4) Which of the following statements is false in regard to the U.S. income tax treaty program?
A) There are over 50 income tax treaties between the U.S. and other countries.
B) For the most part, neither country is prohibited from taxing the income of its residents
C) The treaties generally provide for primary taxing rights that require the other treaty partner to allow a credit for the taxes paid on the twice-taxed income
D) Residence of the taxpayer is an important consideration, while the presence of a permanent establishment is not
E) None of the above statements is false
-- This solution is prepared based on 25+ years of professional tax accounting experience. All answers are correct.
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