FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The United States uses the U.S. Model Income Tax Convention as a starting point for treaty negotiations, and European countries and trading partners employ the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention. The United Nations tax committee has also produced a UN Model Tax Convention.
- Defend the use of the U.S. model as opposed to the OECD or UN models by the United States. Provide an example to support your defense.
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- According to the course text, the United States has employed a worldwide system of taxation for the past 100 years. The Tax Cuts and Jobs Act (TCJA) upended this system. Imagine you are an international tax consultant advising a client on the impact of P.L. 115-97, the law known as the Tax Cuts and Jobs Act, on the taxation of a controlled foreign corporation (CFC). Analyze two changes to CFCs and advise your client on the actions necessary to reduce current and future tax liability as a result of these charges.arrow_forwardThe U.S. system of accounting for worldwide income is not the norm in the rest of the world. Do you think that's a good thing or a bad thing or indifferent?arrow_forwardSuggest at least two advantages and two disadvantages of international taxation.arrow_forward
- If a U.S.-based company regularly purchases goods from foreign suppliers in Japan with the invoice price denominated in Japanese Yen. And if the U.S. company has experienced several foreign exchange losses due to the depreciation of the Japanese Yen. Which type of hedging instrument (Foreign currency forward contract or foreign currency option) the company should employ? Please provide a justification for the selection. Also, compare the advantages and disadvantages of using (Forward contracts) and (Options) to hedge foreign exchange risk.arrow_forwardIf a company in the United States sells a product to another country it is considered a/an If a company from the United States buys a product from another country it is considered a/an O Import, Export O Export, Import O Embargo, Export O Tariff, Import Quotaarrow_forwardUS Tax law contains a two-pronged system for taxing the US source income of foreign persons. Briefly explain this system.arrow_forward
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