In Order to Qualify for the Favorable Tax Treatment of a Foreign

question 62

Multiple Choice

In order to qualify for the favorable tax treatment of a Foreign Sales Corporation,a U.S.firm must meet all of the following tests,except:

• A) at least one director must be a nonresident of the U.S.
• B) its income must be derived from qualified export activity such as the sale of goods abroad.
• C) management must be outside the U.S.
• D) none of the income may be repatriated to the United States.
• E) the FSC must participate in soliciting, negotiating, or contracting with a foreign buyer.

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Definitions:

Investment Accounting Method

A set of principles for recording investments on the financial statements, depending on the level of control or influence over the invested entity.

Consolidated Figures

Financial data that combines information from separate entities into a single set of statements, used for overall analysis.

Consolidation Worksheet

A tool used in accounting to prepare the financial statements of a parent company and its subsidiaries, merging their assets, liabilities, and other financial items into a single set of statements.