Flow-Through and Tax Issues

Question 1

A customer payment for the sale of inventory within the U.S. is business income, which is taxed on a net basis and is subject to withholding: TRUE or FALSE?

Answer 1

FALSE. Not subject to withholding.

Question 2

A U.S. shareholder of a controlled foreign corporation is a U.S. person who owns at least what % of the stock value OR voting stock?

Answer 2

10%

Question 3

A foreign person will not meet the substantial presence test if they are not present in the U.S. for at least how many days during the current year and at least how many days for a three-year period?

Answer 3

31 days during the current year

183 days for a three-year period

Question 4

To calculate the increase in earnings invested in U.S. property, the average adjusted basis of a CFC’s U.S. property for the tax year is compared with the adjusted basis at the end of the preceding tax year. How is the average adjusted basis calculated?

Answer 4

Calculated by dividing the sum of the adjusted basis at the close of each quarter by 4

Question 5

A foreign corporation is considered a CFC if more than what % of its stock is owned by a U.S. shareholder on any day of the year?

Answer 5

50% of its stock

Question 6

A change in the number of members of an LLC that has elected classification as a corporation does not affect the entity’s classification as a corporation: TRUE or FALSE

Answer 6

TRUE

Question 7

Both LLCs and corporations can have a single owner: TRUE or FALSE

Answer 7

TRUE