International Taxation

Solutions

Chapter 1

Knowledge check solutions

1.  
   1. Incorrect. Section 987 does not address currency translation values.
   2. Incorrect. Section 987 does not address the character of gain or loss.
   3. Correct. Section 987 addresses foreign branches that are QBUs.
   4. Incorrect. Section 987 does not address transfer pricing.
2.  
   1. Incorrect. The income from sales commissions must be recognized even though those funds cannot be remitted to the U.S. due to the currency control regulations in country X.
   2. Correct. The U.S. business must report the income on its federal income tax return.
   3. Incorrect. The U.S. business must recognize the full amount of the sales commissions.
   4. Incorrect. All of the sales commissions must be reported on the U.S. business’ federal income tax return.

Chapter 2

Knowledge check solutions

1.  
   1. Incorrect. Determining whether a foreign business operation constitutes a separate corporation for U.S. tax purposes will affect the amount and the timing of available foreign tax credits.
   2. Incorrect. Determining whether a foreign business operation constitutes a separate corporation for U.S. tax purposes will affect applicability of the pass-through rules of Subpart F.
   3. Incorrect. Determining whether a foreign business operation constitutes a separate corporation for U.S. tax purposes will affect applicability of other deferral rules of Subchapter C.
   4. Correct. Determining whether a foreign business operation constitutes a separate corporation for U.S. tax purposes will affect the amount ...