Explain the alternatives available to individual taxpayers in accounting for foreign taxes paid or accrued on their taxable income.
A. A taxpayer who uses the accrual method of accounting claims the foreign tax credit in the year in which the tax is? paid, no exceptions. A taxpayer who uses the cash method of accounting claims the foreign tax credit in the year in which the tax? occurs, no exceptions.
B. The U.S. Government taxes foreign source income but allows a credit for foreign income taxes paid or accrued that can exceed the amount of U.S. taxes owed on all? foreign-source income. The credit system requires that a taxpayer report the? income, file a tax?return, and apply the total credit to reduce his or her U.S. tax liability.
C. An annual election is available to individual? taxpayers, allowing them to deduct or credit any foreign income taxes that have been?paid, no exceptions. The credit system requires that a taxpayer report the? income, file a tax? return, and apply the credit to reduce his or her U.S. tax liability.
D. An annual election is available to individual? taxpayers, allowing them to deduct or credit any foreign income taxes that have been paid or accrued. Simplified reporting rules apply to taxpayers with small foreign tax credit amounts from passive income sources.?However, almost all taxpayers elect to claim the foreign tax credit.
Explain the alternatives available to individual taxpayers in accounting for foreign taxes paid or accrued on their taxable income.
A. A taxpayer who uses the accrual method of accounting claims the foreign tax credit in the year in which the tax is? paid, no exceptions. A taxpayer who uses the cash method of accounting claims the foreign tax credit in the year in which the tax? occurs, no exceptions.
B. The U.S. Government taxes foreign source income but allows a credit for foreign income taxes paid or accrued that can exceed the amount of U.S. taxes owed on all? foreign-source income. The credit system requires that a taxpayer report the? income, file a tax?return, and apply the total credit to reduce his or her U.S. tax liability.
C. An annual election is available to individual? taxpayers, allowing them to deduct or credit any foreign income taxes that have been?paid, no exceptions. The credit system requires that a taxpayer report the? income, file a tax? return, and apply the credit to reduce his or her U.S. tax liability.
D. An annual election is available to individual? taxpayers, allowing them to deduct or credit any foreign income taxes that have been paid or accrued. Simplified reporting rules apply to taxpayers with small foreign tax credit amounts from passive income sources.?However, almost all taxpayers elect to claim the foreign tax credit.
Related questions
Ron, a calendar year taxpayer subject to a 35% marginal taxrate, claimed a Form 1040 charitable contribution deduction of$250,000 for a sculpture that the IRS later valued at $150,000. Theapplicable overvaluation penalty is:
A. $0
B. $7,000
C. $10,000 (maximum penalty)
D. $14,000
Concerning a taxpayerâs requirement to make quarterly estimatedtax payments:
| A. | An individual must make estimated payments if his or her balancedue for the Federal income tax for the year will exceed $1,000. | |
| B. | The due dates of the payments for a calendar-year C corporationare March, June, September, and December 15. | |
| C. | A C corporation must make estimated payments if its Federalincome tax liability for the year will exceed $250. | |
| D. | A trust is not required to make estimated payments. |
Circular 230 allows a tax preparer to:
| A. | Take a position on a tax return that is contrary to a decisionof the U.S. Supreme Court. | |
| B. | Operate the âTax Nerdâs Blogâ on the Internet. | |
| C. | Charge a $5,000 fee to prepare a Form 1040EZ. | |
| D. | Avoid signing a tax return that is likely to be audited. |
Which transaction affects the Other Adjustments Accounton an S corporationâs Schedule M-2?
Charitable contributions | ||
Unreasonable compensation | ||
Payroll tax penalty assessed | ||
Domestic production activities deduction | ||
None of the above |
Which of the following foreign taxes paid by a U.S.corporation is eligible for the foreign tax credit?
Real property taxes | ||
Value added taxes | ||
Dividend withholding taxes | ||
Sales taxes |
