1. Which of the following statements about income tax treaties is false?

A) An income tax treaty is a bilateral agreement between the governments of two countries defining and limiting each country's respective tax jurisdiction.

B) Under a typical treaty, a firm's profits would be allocated to the countries in a manner similar to the apportionment of income among states under the UDITPA formula.

C) The provisions of income tax treaties pertain only to individuals and corporations that are residents of either treaty country.

D) Under a typical treaty, the non-resident country would only tax a firm's profits if the firm maintained a permanent establishment in that country.

2. Transfer pricing issues arise:

A) When rights to use intangible assets, such as patents or trademarks, are licensed between related parties operating in different taxing jurisdictions.

B) None of these situations creates transfer pricing issues.

C) When tangible goods are transferred between related parties operating in different taxing jurisdictions.

D) When tangible goods are transferred between related parties operating in different taxing jurisdictions and when rights to use intangible assets, such as patents or trademarks, are licensed between related parties operating in different taxing jurisdictions.