^13-9

13-9

13-9

teo, except that C Corporation owns 20% of D Corporation Form of Organization. AC Corporation intends to sell some of its products to severa rather than 60 percent. 13 Europe an customers. AC will establish a foreign manufacturing operation after the ears. Start-up costs will result in losses for two years, but profts are ex- pected in all future years. What form of organization should AC use and why? 13-9 Possessions Corporation. List and discuss the tax advantages available to a PC 13-10 Code 482. a. Why is 482 important to a U.S.-based multinational corporation? b. Are all transactions between the U.S. parent corporation and its subsidiaries subject to 482? If an IRS audit results in a 482 shift of income to the U.S. parent corporation, what is the effect on the foreign tax credit? c. 13-11 Regulation 1.861-8. Why is Reg 1.861-8 important to a US-based multinational corporation? If an IRS audit results in a Reg. 1.861-8 shift of taxable income to the US. parent corporation, what is the effect on the foreign tax credit? a. b. the foreign tax authorities disallow a Reg. 1.861-8 allocation to the foreign subsidiary? c. What is the effect on the U.S. parent corporation and foreign subsidiary if 13-12 Foreign Currency Gains and Losses. a. How are foreign currency gains and losses calculated? b. Are foreign currency gains and losses taxable as ordinary or capital? f What effect does blocked currency have on recognition of foreign currenc II S taxation are classifie