In Creating a Foreign Subsidiary, to Avoid Current Income Taxation

question 45

Multiple Choice

In creating a foreign subsidiary, to avoid current income taxation, a U.S. person should transfer ownership to the subsidiary of:

• A) Appreciated stock in another subsidiary.
• B) Appreciated inventory for the new entity to sell.
• C) Both a. and b.

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Definitions:

Pleasure Principle

A concept in psychoanalytic theory that seeks immediate gratification of needs and desires without consideration for the moral or societal constraints.

Moral Conscience

An inner sense of right and wrong that guides a person's beliefs and actions.

Personality

The unique combination of emotional, attitudinal, and behavioral response patterns of an individual.

Superego

In Freudian psychoanalysis, the part of the personality that acts as a moral center, enforcing ethical conduct and striving for perfection.