Reference no: EM133351820

Questions

1. Explain the differences between the worldwide and territorial approaches to taxation.

2. What are the different ways in which income earned in one country can be subject to double taxation?

3. Explain the mechanisms used by different countries to provide relief from double taxation.

4. Bush. Inc. is has total income of $10,000,000, of which $3,000,000 is foreign-source income. The tax rate in Greece (where the foreign income is earned) is 24%. The home corporate tax rate is 21%, and home country taxes persons on their worldwide income. What is Bush's total tax if the home foreign tax credit is limited to the home tax on foreign-source income? What is Bush's total tax if there is no limitation on the foreign tax credit? What is the impact to the home country if it doesn't impose a credit limitation?

5. Read Cook v. Tait, 265 U.S. 47 (1924) (found in Files in Canvas). Briefly explain: (a) the facts, (b) what was the taxpayer's argument for why he should not be subject to U.S. federal income tax, and (c) why the U.S. Supreme Court rejected his argument.

6. Hazel and William, wife and husband, have Country X nationality, and neither of them is a U.S. citizen. They maintain residences in both Country X and Florida. Hazel and the couple's minor children spend about 9 months each year at the Florida residence, and the children attend school in Florida public schools. Hazel and the children spend the summer months (about 80 days) in Country X. William, who owns a construction company in Country X, spends most of the year in Country X, but makes several trips to Florida each year, aggregating about 70 days annually on average. William's income comes from the construction business and several farms he owns in Country X. Hazel also owns several farms in Country X. The farms are rented to tenants and produce significant amounts of rental income. Generally, how are Hazel and William to be taxed in the U.S.?

7. Harry is a citizen of France and a professional drag racer. He decides to come to the U.S. to open a car dealership. Harry does not obtain a green card or U.S. citizenship, but he procures a visa to work in the U.S. He is in the U.S. during the following periods:

20Y1: April 1 through August 1

20Y2: June 1 through August 1

What best describes Harry's status for U.S. residency purposes for each year? Will the carryover rules change anything? Explain.