M5-Multi-Jurisdictional Tax Issues

Question 1

Transfer pricing issues exist when a US based taxpayer shares costs with an affiliate that either:

Answer 1

1) is not subject to the US income tax or

2) does not file a consolidated income tax return with the US based taxpayer

Question 2

The organizations that are subject to the provisions of the IRC that allow the IRS to adjust gross income, deductions, credits, and allowances to prevent the evasion of taxes are to members of an affiliated group that file a consolidated US income tax return. (true or false)

Answer 2

true

Question 3

Foreign income taxes paid by a domestic corporation may be claimed either as a deduction or as a credit, at the option of the corporation. (true or false)

Answer 3

true

Question 4

What is the Advance Pricing Agreement Program?

Answer 4

The APA is a binding contract between the IRS and the taxpayer by which the IRS agrees not to seek a transfer pricing adjustment for a covered transaction if the taxpayer files its return for a covered year consistent with the agreed transfer pricing method.

Question 5

Income earned by a foreign subsidiary is generally not taxed until the earnings are paid as a dividend to the US shareholder. (true or false)

Answer 5

true

Question 6

Nexus is defined as the minimum level of contact a taxpayer may have with a jurisdiction to be subject to its tax. (true or false)

Answer 6

true

delivery by a common carrier (e.g., a delivery business) does not create nexus.

Installing or supervising the installation of property for a customer within a state creates nexus.

Approval or acceptance of orders within the state creates nexus.

Collection of delinquent accounts within the state creates nexus.