INTERNATIONAL TAXATION 3. Foreign company, FC, is engaged in the business of pur

Question

INTERNATIONAL TAXATION

3. Foreign company, FC, is engaged in the business of purchasing and selling wine. As a result of advertising placed by FC, customers in the US place orders of wines directly with FC's home office. FC ships the wine directly to US customers, with title passing in the US. FC generates $600,000 of US source income as a result of the wine sales. FC has no employees or fixed place of business in the US. Will FC be subject to taxation on its US wine sales? Please explain your answer and any assumptions you are making.

4. Assume FC above is also in the business of selling equipment in the US through a branch located in Florida. Also assume that FC is located in a non-treaty country. The branch earns in 2016 $35,000 of net US source income.

a.Will FC be subject to tax in the US on its equipment sales?

b. Will FC be subject to tax on its wine sales? section 864c3.

c. If FC were located in a treaty country, would your answer change?

Explanation / Answer

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