Income Is "Effectively Connected" with the Conduct of a U

question 34

Multiple Choice

Income is "effectively connected" with the conduct of a U.S. business only if

• A)the asset-use test is met.
• B)the business activities test is met.
• C)activities of the U.S. business are a material factor in the realization of the income.
• D)Either A, B, or C can be correct.

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Definitions:

Cash

Money in the form of coins or banknotes, especially that used to operate a business.

Cash Basis

An accounting method whereby revenues and expenses are recorded when cash is received or paid, rather than when they are incurred.

Accounting

The process of recording, classifying, summarizing, and interpreting financial transactions to provide information that is useful in making business decisions.

Financial Statements

Reports summarizing a company's financial performance and position, including income statement, balance sheet, and cash flow statement.