1 .Global Car Parts, Ltd is a U.S. Corporation that established a Country F subsidiary to manufacture certain automobile parts. During its first year, the subsidiary earned 600,000 Country F dollars and paid taxes of 120,000 Country F dollars when the exchange rate was U.S. $1 = .90 Country F dollars. The average exchange rate in Year 1 was US $1 = .95 Country F dollar. No dividends were paid in Year 1. During year 2, the Country F subsidiary broke even, but paid a dividend of 150,000 Country F dollars. The spot exchange rate on the date the dividend was distributed and included in the parent corporation?s income was US $1 = 1.05 Country F dollars. Determine the gross income that must be reported by Global Car Parts and the deemed paid foreign tax credit available to them [Assume there is no Subpart F income].

2. (Uncle Sam, a U.S. citizen, owns 100% of USAco, a domestic S corporation. USAco has export sales of $8 million of low margin products. Assume that Uncle Sam?s tax rate is 40% for ordinary income and 23.8% for qualifying dividend income. What is the tax benefit if Uncle Sam forms an IC-DISC and determines the commission expense using the 4% of gross receipts from qualifying sales method?

3 .Hans is a citizen and resident of Argentina. Hans is unmarried and has no dependents. Hans does not hold a green card, and Argentina does not have an income tax treaty with the United States. On January 2, 2016, Hans paid $3.0 million for an apartment building located in the suburbs of Washington, D.C. Hans does not actively manage the building, but rather leases it to an unrelated property management company that subleases the building to the tenants. During 2016, Hans had rental income of $400,000 and operating expenses (depreciation, interest, insurance, etc.) of $250,000. On the advice of his accountant, Hans made a Code Sec. 871(d) election in 2016.

4.On January 4, 2017, Hans sold the building for $3.1 million. Hans? had taken a $90,000 depreciation deduct so his adjusted basis in the building at that time was $2.91 million. He had no rental income or expense in 2017.He pays no taxes in Argentina related to this property in 2016 or 2017.

(a) Compute Hans? tax liability for 2016 and 2017 (assume tax rates and personal exemption amounts are the same as 2016 for both years). Hint: it may help you to refer to Form 1040NR and the related instructions.

(b) How would your answer in part (a) change if he had not made the 871(d) election?

1 .Global Car Parts, Ltd is a U.S. Corporation that established a Country F subsidiary to manufacture certain automobile parts. During its first year, the subsidiary earned 600,000 Country F dollars and paid taxes of 120,000 Country F dollars when the exchange rate was U.S. $1 = .90 Country F dollars. The average exchange rate in Year 1 was US $1 = .95 Country F dollar. No dividends were paid in Year 1. During year 2, the Country F subsidiary broke even, but paid a dividend of 150,000 Country F dollars. The spot exchange rate on the date the dividend was distributed and included in the parent corporation's income was US $1 = 1.05 Country F dollars. Determine the gross income that must be reported by Global Car Parts and the deemed paid foreign tax credit available to them [Assume there is no Subpart F income]. 2. (Uncle Sam, a U.S. citizen, owns 100% of USAco, a domestic S corporation. USAco has export sales of $8 million of low margin products. Assume that Uncle Sam's tax rate is 40% for ordinary income and 23.8% for qualifying dividend income. What is the tax benefit if Uncle Sam forms an IC-DISC and determines the commission expense using the 4% of gross receipts from qualifying sales method? 3 .Hans is a citizen and resident of Argentina. Hans is unmarried and has no dependents. Hans does not hold a green card, and Argentina does not have an income tax treaty with the United States. On January 2, 2016, Hans paid $3.0 million for an apartment building located in the suburbs of Washington, D.C. Hans does not actively manage the building, but rather leases it to an unrelated property management company that subleases the building to the tenants. During 2016, Hans had rental income of $400,000 and operating expenses (depreciation, interest, insurance, etc.) of $250,000. On the advice of his accountant, Hans made a Code Sec. 871(d) election in 2016. 4.On January 4, 2017, Hans sold the building for $3.1 million. Hans' had taken a $90,000 depreciation deduct so his adjusted basis in the building at that time was $2.91 million. He had no rental income or expense in 2017. He pays no taxes in Argentina related to this property in 2016 or 2017. (a) Compute Hans' tax liability for 2016 and 2017 (assume tax rates and personal exemption amounts are the same as 2016 for both years). Hint: it may help you to refer to Form 1040NR and the related instructions. (b) How would your answer in part (a) change if he had not made the 871(d) election