Broom Inc., a US corporation, buys brooms from Mop Inc., an unrelated company, that are manufactured in the US and sells the brooms to customers located in Moldova. Title passes in Moldova. The income from the sale is foreign source income. True False
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- An Indian corporation (IndiCo) is wholly owned by a US corporation (USCo). IndiCo purchases corn produced by USCo in the United States and resells it abroad. How is IndiCo’s income treated for U.S. tax purposes if, alternatively: A – IndiCo sells the corn to an independent distributor in India, which resells the corn to customers in Thailand. IndiCo directs USCo to ship the corn directly to the distributor’s customers in Thailand. B-The corn is exported to a factory owned by IndiCo in Vietnam where it is popped and packaged. After this is complete, the popcorn is shipped to a Thai distributor where it is sold to retailers. Assume that IndiCo is not subject to tax in India, Thailand or Vietnam. Question 2 USCo owns 100% of a Canadian Corporation (CanCo) and 100% of a Mexican Corporation (MexCo). CanCo owns a portfolio of stocks that receives dividend payments of $75,000. CanCo also purchases umbrellas from an unrelated party and…Determine whether the sourcing of income for the following transactions is U.S. or foreign. a. Suarez, an NRA, sells stock in Home Depot, a U.S. corporation, through a broker in San Antonio. b. Chris sells stock in IBM, a U.S. corporation, to her brother, Rich. Both Chris and Rich are NRAs, and the sale takes place outside the United States. c. Crows, Inc., sells inventory produced in the United States to customers in Europe. Title passes in the international waters of the Atlantic Ocean. d. Doubles, Inc., a U.S. corporation, manufactures equipment in Malaysia and sells the equipment to customers in the United States.Which of the following would NOT participate in the foreign exchange market? Canadian parents purchasing children's toys that were manufactured in China. American tourists visiting Turkey U.S. Based firms trading cars that were manufactured in Canada, China, South Korea, and Germany for sale in the United States. Mexican investors buying part-ownership of a French company.
- 9. HiramCo, a U.S. entity, wholly owns corporations that operate manufacturing businesses in both Mexico and Costa Rica, and it holds its investment portfolio in Sweden. How many foreign tax credit computations must HiramCo make? Be specific, and use the term basket in your answer.Please help me with this question: IrishCo, a manufacturing corporation resident in Ireland, distributes products through a U.S. office. Current-year taxable income from such sales in the United States is $12,000,000. IrishCo's U.S. office deposits working capital funds in short-term certificates of deposit with U.S. banks. Current-year interest income from these deposits is $150,000. IrishCo also invests in U.S. securities traded on the New York Stock Exchange. This investing is done by the home office. For the current year, IrishCo has realized capital gains of $300,000 and dividend income of $50,000 from these stock investments. Compute IrishCo's U.S. tax liability, assuming that the U.S.-Ireland income tax treaty reduces withholding on dividends to 15% and on interest to 5%. Assume a 21% U.S. tax rate. IrishCo's U.S. tax liability is $Baxter, a US Company, has a 100% owned subsidiary in Japan. The functional currency for the subsidiary is the Japanese yen. The Japanese subsidiary purchases merchandise on credit from a Swiss company, with payment due in US dollars. Between the date of purchase and the due date of the payable, the swiss franc strengthens against the US dollar and the Japanese yen weakens against the US dollar. What will be the result to Baxter. A) There will be a foreign exchange loss B) There will be no foreign exchange gain or loss C) There will be both a foreign exchange gain and loss D) Juno will need to enter into a hedge to reduce its foreign currency exposure E) There will be a foreign exchange gain
- Juancho Company, a manufacturing company based in Laguna, Philippines, purchased raw materials from a foreign company denominated in foreign currency. Which of the following is correct? If the foreign currency appreciates, Juancho will recognize foreign exchange loss. O If the foreign currency appreciates, Juancho will recognize foreign exchange gain. O If the foreign currency depreciates, Juancho will recognize foreign exchange loss. Any gain or loss will be deferred until the date of settlement. O No gain nor loss will be recognized in the financial statement.Harris Incorporated had the following transactions: On May 1, Harris purchased parts from a Japanese company for a U.S. dollar–equivalent value of $7,000 to be paid on June 20. The exchange rates were May 1 1 yen = $0.0070 June 20 1 yen = 0.0075 On July 1, Harris sold products to a Brazilian customer for a U.S. dollar equivalent of $10,400, to be received on August 10. Brazil’s local currency unit is the real. The exchange rates were July 1 1 real = $0.20 August 10 1 real = 0.22 Required: Assume that the two transactions are denominated in U.S. dollars. Prepare the entries required for the dates of the transactions and their settlement in U.S. dollars. Assume that the two transactions are denominated in the applicable LCUs of the foreign entities. Prepare the entries required for the dates of the transactions and their settlement in the LCUs of the Japanese company (yen) and the Brazilian customer (real).Identify a product that would be interested in importing and selling here in the U.S. What is the pros and cons of using any two methods of payment to settle the transaction with the overseas supplier of the product Importing and selling here in U.S.?
- XYZ is a German Company that has its foreign affiliation in Oman as Watiyyah Inc. The functional currency of Oman is OMR. The reporting currency for XYZ is EUR. The company shows the below accounts: Cash (OMR 15000), Capital (OMR 75000), Accounts Receivable (OMR 30000), Long Term Debt (OMR 10000), Accounts payable (OMR 25000), Land and Building (OMR 25000), Inventory (OMR 40000), Prepare the balance sheet of Watiyyah Inc. Translate the above balance sheet into EUR using the temporal method using the below exchange rates: The current exchange rate is OMR 0.4350/EUR The historical exchange rate is OMR 0.4060/EURABC Inc. is a U.S. firm with annual export sales to Canada of about C$500 million. Its main competitor is XYZ Inc., also based in the United States, with a subsidiary in Canada that generates about C$500 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Based on the information provided, which company is subject to a higher degree of translation exposure? Explain.Provide an example of how a US taxpayer that manufactures the property which that taxpayer sells could increase its net foreign source income. Next, assume instead the US taxpayer doesn’t manufacture but rather is a reseller of a finished good. Provide an example of how a reseller could increase its net foreign source income. Lastly, why is it generally better for a US taxpayer to increase its net foreign source income if it is subject to US tax on a worldwide basis?
