Which of the Following Statements Is False

question 10

Multiple Choice

Which of the following statements is false?

• A) When the foreign tax rate is less than the U.S. tax rate, deferral can provide significant benefits.
• B) The U.S. tax liability is not incurred until the profits are brought back home if the foreign operation is set up as a foreign branch rather than as a separately incorporated subsidiary.
• C) If a company chooses not to repatriate £12.5 million in pre-tax earnings, for example, it effectively reinvests those earnings abroad and defers its U.S. tax liability.
• D) When the foreign tax rates exceed the U.S. tax rates, there are no benefits to deferral because in such a case there is no additional U.S. tax liability.