Which of the following statements is true about U.S.taxation of foreign subsidiaries?
A)The U.S.does not tax income generated on subsidiaries incorporated in foreign countries.
B)U)S.multinationals pay tax on their worldwide income as soon as it is earned.
C)Transfer pricing will eliminate taxes by the U.S.government on multinational corporations.
D)U)S.tax on foreign operations does not have to be paid until the income is brought back to the United States.

Question

Quizplus · Accepted Answer

The U.S.tax on foreign operations does not have to be paid until the income is repatriated or brought back to the United States. This is known as deferral taxation. However, there are rules and regulations that govern the repatriation of profits from foreign subsidiaries, including the requirement to pay taxes on certain types of income earned by those subsidiaries. Transfer pricing is a mechanism used by multinational corporations to allocate profits among their subsidiaries to minimize the overall tax liability, but it does not eliminate taxes by the U.S.government on multinational corporations. Therefore, option A, B, and C are incorrect.

Which of the Following Statements Is True About U