ch24 - ch24 Student: 1. "Outbound...

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Unformatted text preview: ch24 Student: 1. "Outbound taxation" deals with the U.S. tax rules that apply to U.S. persons doing business outside the United States. True False Amy is a U.S. citizen. During the year she earned income from an investment in a French company. Amy will be subject to U.S. taxation on her income under the principle of source-based taxation. True False Nexus involves the criteria used by a government to assert its right to tax a person or transaction within or without its borders. True False The United States generally taxes U.S. source fixed and determinable, annual or periodic income earned by non-U.S. persons by applying a withholding tax to the gross amount of income. True False Philippe is a French citizen. During 2012 he spent 150 days in the United States on business. Because Philippe does not spend 183 days in the United States in 2012, he will not be treated as a resident alien for U.S. tax purposes. True False A non U.S. citizen with a green card will always be treated as a resident alien for U.S. tax purposes regardless of the number of days she spends in the United States during the current year. True False The foreign tax credit regime is the primary mechanism used by the United States government to mitigate or eliminate the potential double taxation of income earned by U.S. persons outside the United States. True False Marcel, a U.S. citizen, receives interest income from bonds issued by a Dutch corporation. The interest income will be considered U.S. source income for U.S. tax purposes. True False Cecilia, a Brazilian citizen and resident, spent 120 days working in the United States in the current year and earned $50,000. Because she spent more than 90 days in the United States, Cecilia's income will be treated as U.S. source and subject to U.S. taxation. The United States does not have an income tax treaty with Brazil. True False The gross profit from a sale of inventory manufactured in the United States and sold in Spain will always be treated as 100 percent U.S. source income. True False Deductible interest expense incurred by a U.S. corporation will always be treated as a U.S. source deduction. True False Once a U.S. corporation chooses a method to allocate interest expense, either fair market value or tax book value, that election cannot be changed without the permission of the commissioner of the Internal Revenue Service. True False 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Under most U.S. treaties, a resident of the other country must have a permanent establishment in the United States before being subject to U.S. taxation on business profits earned within the United States. True False Alex, a U.S. citizen, became a resident of Belgium in 2012. Alex will no longer be subject to U.S. ...
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