Chapter 14, Problem 35QA

Mf2. Prior to the 2017 tax act, many U.S. multinational corporations kept profits abroad in the form of cash rather than returning them to the U.S. A major motive for this was the fact that under the U.S. tax code:   A.foreign branch earnings were taxed only when funds were transferred to the parent. B.foreign subsidiary earnings were taxed only when funds were transferred to the parent. C.branch and subsidiary earnings were taxed only when transferred to the parent. D none of the above.

Identify whether the following items are subject to regular income tax, final tax, or exempt from income tax. Dividend income received from a domestic corporation by a nonresident foreign corporation Dividend income received from a resident foreign corporation by a domestic corporation Dividend income received from a resident foreign corporation by a resident foreign corporation Prizes from USA lotto Share in the net income of ordinary partnership Money received from reporting a company engaged in illegal activities Bag full of cash amounting to P500,000 found along the road Annual salary of a garbage collector not exceeding P200,000 Travel allowance liquidated and fully supported by receipts Performance bonus equivalent to 3x of the monthly salary P100,000 Royalties on songs written Sale of shares of stocks not listed in stock exchange Rent payments received by a resident alien for the lease of his residence abroad Cash prize of P1,000,000 for winning the…

As the Chief Financial Officer (CFO) of a U.S. multinational corporation, create a plan to reduce the tax impact on foreign sourced income. Provide at least one example to support your plan.