United States Tool Corp., a U.S. corporation,sells all of the stock of its wholly ownedGerman Subsidiary, Modern Tool A.G., to anunrelated German corporation for $50 millioncash, which produces a gain of $40 million.All negotiations occur and the sale contract isexecuted in Germany. Title to the stock passesto the purchaser in Germany, and thepurchase price is paid in Germany. ModernTool A.G. has been actively engaged inbusiness in Germany and France for the last10 years and has received approximately 60percent of its gross income from France and40 percent from Germany each year. Is thegain foreign-source income?

Taxable Income: It is the portion of the income on which tax is calculated that is to be paid to…

cash, which produces a gain of $40 million. All negotiations occur and the sale contract i executed in Germany. Title to the stock pass to the purchaser in Ġermany, and the purchase price is paid in Germany. Modern Tool A.G. has been actively engaged in business in Germany and France for the last 10 years and has received approximately 60 percent of its gross income from France and 40 percent from Germany each vear. Is the

cash, which produces a gain of $40 million. All negotiations occur and the sale contract i executed in Germany. Title to the stock pass to the purchaser in Ġermany, and the purchase price is paid in Germany. Modern Tool A.G. has been actively engaged in business in Germany and France for the last 10 years and has received approximately 60 percent of its gross income from France and 40 percent from Germany each vear. Is the

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter25: Taxation Of International Transactions

Section: Chapter Questions

Problem 16P

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