118. Which of the following statements regarding income sourcing is not correct?a. U.S. persons benefit from earning low-tax foreign-source income.b. Foreign persons generally benefit from avoiding U.S.-source income classification.c. U.S. persons are not concerned with source of income because all their income is subject to U.S. tax under a worldwide system.d. Foreign persons may be subject to tax on U.S.-source income without regard to their actual presence in the United States.ANSWER:
c119. ForCo, a foreign corporation, receives interest income of $50,000 from USCo, an unrelated domestic corporation. USCo historically has earned 79% of its gross income from active foreign-source business income. What amount of ForCo’s interest income is U.S.source?
d120. WorldCo, a foreign corporation not engaged in a U.S. trade or business, receives $50,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 78% of its income from foreign sources. How much of WorldCo’s interest income is U.S. source?
a121. GlobalCo, a foreign corporation not engaged in a U.S. trade or business, receives $80,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 24% of its income from foreign sources. How much of GlobalCo’s interest income is U.S. source?
a122. Which of the following statements is true, concerning the sourcing of income from inventory produced by the taxpayer in the U.S. and sold outside the U.S.?a. Because the inventory is manufactured in the U.S., all of the inventory income is U.S. source.b. If title passes on the inventory outside the U.S., all of the inventory income is foreign source.