Which of the Following Tax or Non-Tax Benefits Does Not

question 98

Multiple Choice

Which of the following tax or non-tax benefits does not arise when a U.S. corporation forms a hybrid entity in Germany through which to earn business profits in Germany and elects to have the entity treated as a branch for U.S. tax purposes?

• A) Flow-through of losses from the German corporation to the tax return of the U.S. corporation.
• B) Free transferability of the stock of the hybrid entity by the U.S. corporation.
• C) Potential deferral of U.S. tax on income earned by the corporation.
• D) Limited liability to the U.S. corporation for acts committed by the hybrid entity.

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Definitions:

Bilateral Contract

A contract involving two parties where each promises to perform an act in exchange for the other's act.

Unilateral Contract

A contract in which one party makes a promise that the other party can accept only through an action, not a promise.

Accept

To receive something willingly or to agree to a proposition or offer.

Promisee

The person to whom a promise is made or directed in a contract, opposite to the promisor.