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Unformatted text preview: Week 5 Chapter 9 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The Internal Revenue Code regulates transfer pricing in the United States by encouraging the use of a transfer price that a. reflects what the price would have been if the underlying transaction was between unrelated parties. b. shifts all income to the United States based company. c. maximizes parent taxable income regardless of where the parent corporation is incorporated. d. shifts all income to the highest income tax jurisdiction. ____ 2. A manufacturer produced a good with a value of 250, the retailer added 125 to the value of the good. Assuming the value added tax rate is 15% the net value added tax due to the government by the retailer is a. 37.50 b. 18.75 c. 56.25 d. ____ 3. Parent Corporation is located in a country with an income tax rate of 40%. Subsidiary Company is located in a country with an income tax rate of 25%. The best tax strategy for the enterprise would be to set the transfer a country with an income tax rate of 25%....
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- Spring '10