Accounting Question

The following payments by a U.S. subsidiary to its foreign parent reduces the U.S. tax
base, except:
A. Interest on inter-company debt
B. Dividends paid to the parent company
C. Royalties on intangibles licensed by the parent company
D. Management fees paid to the foreign company
A domestic reverse hybrid entities have been a popular vehicle for financing structures
where the interest is deductible by the U.S. subsidiary and U.S. parent.
True
False
A U.S. entity that is treated as a disregarded entity or a partnership for U.S. income tax
purposed but a corporation for foreign tax purposes is referred to as:
A. Domestic reverse hybrid entity
B. Limited Liability Company
C. Domestic Hybrid entity
D. Sociedad Anonima treated as a disregarded entity
Code Section 267A prevents a U. S. taxpayer from deducting interest paid to a foreign
related party that does not include the item in income.
True
False
Which scenario below would likely produce the lowest effective tax rate for a foreign
corporation owning 100% of a U.S. subsidiary that does not plan to pay dividends
(references to a low or high tax jurisdiction refers to higher or lower than the U.S.
corporate rate):
A. Parent company in a high tax jurisdiction that uses a transfer pricing strategy to
increase the inter-company price on goods sold to the U.S. subsidiary
B. Parent company in a low tax jurisdiction that uses a transfer pricing strategy to
increase the inter-company price on goods sold to the U.S. subsidiary
C. Parent company in a high tax jurisdiction that uses a transfer pricing strategy to
increase the inter-company price on goods sold to the U.S. subsidiary and, also, charges
management fees to the U.S. subsidiary for head office services allocated and
apportioned to the U.S. subsidiary.
D. Parent company in a low tax jurisdiction that uses a transfer pricing strategy to
increase the inter-company price on goods sold to the U.S. subsidiary and, also, charges
management fees to the U.S. subsidiary for head office services allocated and
apportioned to the U.S. subsidiary.
Which of the below transactions is of the type governed by the Code section 367(a)
outbound provisions:
A. A U.S. person’s transfer of shares to a foreign corporation as part of a corporate
reorganization
B. A liquidation of a U.S. subsidiary by a foreign corporation
C. A U.S. corporation incorporating a branch it maintains in a foreign country
D. All of the above
Which of the following is not one of the requirements for the anti-inversion rules of IRC
section 7874 to apply to a U.S. parent corporation:
A. The group does not have substantial business activities in the foreign corporation’s
country of incorporation compared to the total worldwide business activities of the
group
B. The U.S. corporation becomes a subsidiary of the foreign corporation
C. The U.S. shareholders must own at least 50% of the shares of the foreign corporation
as a result of the inversion transaction
D. The U.S. corporation transfers substantially all of its properties to the foreign
corporation
In general, the rules on outbound transfers are designed to capture the tax on assets
transferred outside of the U.S.’s taxing jurisdiction, that have appreciated in value., in an
otherwise tax free transaction,
True
False
IRC section 367 can also applies to foreign-to-foreign transfers in an acquisitive
reorganization
True
False
The branch loss recapture rule requires that a foreign person must recognize gain on the
incorporation of a U.S. branch to the extent the foreign person has previously deducted
branch losses against its other taxable income.
Group of answer choices
True
False