It is obviously possible for both individuals and legal entities to be resident in two or more countries for the same year. These dual-residence situations may result in double taxation or in tax avoidance opportunities. How are the double tax consequences avoided?
Dual-residence companies may be utilized to deduct losses in more than one country. Consider this situation. XCo is incorporated and therefore resident in Country X. XCo is part of a corporate group in Country X which files on a consolidated basis. XCo has losses which reduce the group’s income. XCo’s place of management is shifted from Country X to Country Y. The corporate group of which XCo is a member has a subsidiary in Country Y with taxable profits. Because XCo becomes a resident of Country Y as a result of its management there, XCo’s losses may be used (depending on the tax law of Country Y) to offset the subsidiary’s profits. Some countries have rules to prevent the use of dual-residence companies in this way.

Ignoring the fact that this is probably a homework question, international tax treaties allows for tax credits for taxes paid to the secondary conuntry on the tax return to the primary country. Further, if the tax liability in the secondary country EXCEEDS the tax liability in the primary country, carry forward provisions allows the credit to be brought forward to future years and, in some cases, carried back to past years.