Flow-Through Entity Taxation and Multi-jurisdictional Tax Issues Flashcards
(29 cards)
T or F, foreign income taxes paid by a domestic corporation may be claimed as a deduction or a credit, at the option of the corporation.
T
how are the following sourced:
sale of inventory
compensation for personal services
where title passes
where service is performed
when is a foreign corporation considered a controlled foreign corporation (CFC)?
when more than 50% of its stock is owned by a US shareholder on any day of the year
transfer pricing issues exist when a US-based TP shares costs, transfers, sells, purchases, leases, enters into a contract with an affiliate that either…
*hint: 2 things
is not subject to US income tax
OR
does not file a consolidated return with the US-based TP
what factor allows a state to impose an income tax on net income of a company?
physical presence (Nexus) within the state
which states can tax a company’s nonoperating income?
only the company’s home state
what is the apportionment % based on?
property, payroll, and sales.
*remember that operating income is apportioned between states
what is a controlled taxpayer?
any one of two or more taxpayers owned or controlled directly or INDIRECTLY by the same interest
if there is a mid-year change of ownership in an S corp, how is income allocated between the shareholders?
on a per share, per day basis
T or F, the value of fringe benefits such as health insurance is includable in the gross income of S corp. shareholders who own more than 2% of the S corp’s stock (unless the S corp does not deduct the cost of such benefits).
T
when is an S corp subject to the “built-in gains” tax?
only when the S corp was previously a C corp
FMV at election - adj basis at election = built-in gain when asset is sold
can an S corp be a shareholder in a C corp?
yes, but a C corp cannot be a shareholder in an S corp
is Section 179 expense a separately stated or non-separately stated item? How about interest income and LT capital G/L?
separately stated (aka not included in the calculation of ordinary income)
what is the tax rate for the built-in gains tax?
21%
do capital contributions by shareholders increase the accumulated adjustments account (AAA)?
NO
what would cause an S corp to be terminated?
passive investment income greater than 25% of gross receipts for 3 consecutive years
does a guarantee of corporate debt create a debt basis?
NO, only direct loans to the corporation create debt basis
when would a partnership actually be terminated for income tax purposes?
when the partnership’s business and financial operations are discontinued and/or only one partner remains
can a partnership elect to have a tax year other than the generally required tax year?
yes, but only if the deferral period for the tax year elected does not exceed 3 MONTHS
if an LLC does not elect to be treated as a corporation, how will it be treated for tax purposes?
a partnership
the base erosion and anti-abuse tax (BEAT) may apply to corporations with…
avg annual gross receipts of 500 million or more for the 3 preceding tax years
what type of situation increases a corp’s foreign-derived intangible income?
sales to non-US persons of property for use outside the US
income that is considered fixed, determinable, annual, or period (FDAP) is subject to what?
US withholding tax requirements
who/what is a 100% DRD for foreign source dividends available to?
only to corporate shareholders who own at least 10% of the foreign corp
