SA IBL TB8e Ch18

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CHAPTER 18—TAKINGS AND NATIONAL CONTROLS ON FOREIGN DIRECT INVESTMENT TRUE/FALSE 1. North American and Western European countries generally accept the modern traditional theory of the taking of private property as customary international law. ANS: T PTS: 1 2. Cases involving the payment of compensation for the expropriation of property must be settled in courts of law. ANS: F PTS: 1 3. The political risk of investing in developed countries is roughly comparable with the risks of investing in the developing countries. ANS: F PTS: 1 4. Classical theories on the taking of property of foreign citizens by governments were originally developed to protect the interests of European investments abroad. ANS: T PTS: 1 5. Under the…show more content…
ANS: T PTS: 1 28. Because passive investments create the least risk of foreign control, they are the least regulated of foreign investments. ANS: T PTS: 1 29. Passive investment in less-developed countries is similar to other developed countries since equity shares are easily transferable worldwide. ANS: F PTS: 1 30. A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity. ANS: T PTS: 1 31. The "transfer pricing" provision attempts to identify the taxable income had the transaction been between unrelated parties dealing at arm's length. ANS: T PTS: 1 32. Simplification and centralization of foreign investment pre-approval procedures have become commonplace in developing countries in recent years. ANS: T PTS: 1 33. The precise structure of inactive investment in a foreign nation depends largely on the treatment of the structure under the tax laws of the host country and the U.S. ANS: T PTS: 1 34. One tax issue that presents no problem for a U.S. investor is the question of crediting taxes it has paid to a foreign country against taxes it would have to pay the U.S. on its federal return. ANS: F PTS: 1 35. Under U.S. law, corporations are taxed on all income, including income from foreign sources. ANS: T PTS: 1 36. Dividends paid from a foreign subsidiary to the U.S. parent company are not

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