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

question 38

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

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Definitions:

Accounting Break-even

The point at which total costs and total revenues are equal, leading to neither profit nor loss.

Variable Costs

Costs that vary directly with the level of output or production, such as materials and labor.

Fixed Costs

Expenses that do not change with the level of goods or services produced over a short period, such as rent or salaries.

Financial Break-even

The point at which a company's total revenues are exactly equal to its total expenses, resulting in neither profit nor loss.