Question 1

Darlene,a U.S.citizen,has foreign-earned income of $150,000 and employment-related expenses of $15,000.Darlene earns no other income.Darlene also has $12,000 of itemized deductions not directly related to the foreign-earned income.She can exclude $97,600 of foreign-earned income.Darlene incurs $33,750 of Country C income taxes on $150,000 of Country C taxable income.How much of Darlene's foreign income taxes are noncreditable?

Accepted Answer

The answer of Darlene,a U.S.citizen,has foreign-earned income of $150,000 and...

Question 2

The physical presence test method of qualifying for the foreign-earned income exclusion requires the

Accepted Answer

The physical presence test method of qualifying for the foreign-earned income exclusion requires the presence in one or more foreign countries for at least 330 full days during a 12-month period. It does not have to be consecutive, but rather the total number of days in foreign countries during a 12-month period must add up to at least 330.

Question 3

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 4

Marcella,an alien individual,is present in the United States for 122 days this year and 122 days each in the past two years.Does she satisfy both the 31-day and 183-day requirements for U.S.Residency status?

Accepted Answer

The answer of Marcella,an alien individual,is present in the United...

Question 5

U.S.citizen Patrick is a bona fide resident of a foreign country for all of the current year.Patrick uses a calendar year as his tax year.He has $100,000 of self-employment income and incurs $20,000 in housing expenses.The base housing cost amount is $15,616.The deduction for housing expenses is

Accepted Answer

C)$20,000 - $15,616 = $4,384 deductible for AGI

Question 6

A nonresident alien earns $10,000 of dividends from a domestic corporation,which is the alien's only U.S.source income.Which one of the following statements is incorrect?

Accepted Answer

Option A is correct. Nonresident aliens are subject to a flat tax rate of 30% on all U.S. source income unless reduced by a tax treaty.

Option B is correct. The domestic corporation is required to withhold the tax from the dividend payment, and pay it to the IRS.

Option C is incorrect. The 30% tax rate is applied against the net income, not gross income.

Option D is incorrect. Nonresident aliens are not required to pay estimated taxes. However, if the tax withheld at source is less than the actual tax liability, the nonresident alien must file a tax return to claim a refund of the excess tax withheld or pay the additional tax due.

Question 7

U.S.citizen Barry is a bona fide resident of a foreign country for all of 2013.Barry uses a calendar year as his tax year and receives $158,000 in salary and allowances from his employer.Included in the $158,000 is a $25,000 housing allowance.Barry's housing costs are $30,000.The base housing amount for the current year is $15,616.What amount related to his housing can Barry exclude on his Form 2555?

Accepted Answer

To determine the amount of housing expenses that Barry can exclude, we first need to calculate the excess of his total housing costs over the base housing amount.

Excess Housing Costs = Total Housing Costs - Base Housing Amount 
Excess Housing Costs = $30,000 - $15,616 
Excess Housing Costs = $14,384

Next, we need to calculate the maximum amount of the housing exclusion, which is generally limited to 30% of the foreign earned income exclusion. For 2013, the foreign earned income exclusion is $97,600, so 30% of that is $29,280.

However, the housing exclusion is also limited to the actual foreign earned income that Barry earned during the year. Since Barry earned $158,000 in foreign earned income, which is more than $29,280, the housing exclusion is fully phased out. Therefore, Barry can exclude the entire excess housing cost of $14,384.

Question 8

Identify which of the following statements is true.

Accepted Answer

A) Nonresident aliens are subject to U.S. tax on capital gains if they are physically present in the U.S. for at least 183 days during the tax year, but this rule does not apply to gains related to the conduct of a U.S. trade or business. B) is incorrect because U.S. residents, including resident aliens, are taxed on their worldwide income, not just U.S. income. C) is incorrect because the tax rate and the ability to take deductions for a nonresident alien can vary based on the type of U.S. income and any applicable tax treaties.

Question 9

Nonresident aliens are not allowed to claim the standard deduction.

Accepted Answer

Nonresident aliens are not eligible to claim the standard deduction on their US tax return. They can only take certain itemized deductions if they meet specific criteria.

Question 10

Karen,a U.S.citizen,earns $40,000 of taxable income from U.S.sources,$20,000 in taxable wages from Country A and $20,000 in taxable interest from Country B.The U.S.tax rate is 25%.The tax on Country A income is $8,000,and Country B charges no tax on the interest income.Assuming only a single basket is required,Karen's foreign tax credit that can be claimed is

Accepted Answer

The answer of Karen,a U.S.citizen,earns $40,000 of taxable income from...

Question 11

Pedro,a nonresident alien,licenses a patent to a U.S.company for an $11 per unit fee for each unit produced.As a result of receiving the fee,Pedro must recognize the fee as

Accepted Answer

The licensing fee received by Pedro is considered ordinary income and is subject to U.S. taxation as it was earned from a U.S. source (the U.S. company). As a nonresident alien, Pedro is only taxed on his U.S. source income.

Question 12

In January of the current year,Stan Signowski's U.S.employer assigned him to their Paris office.This year,he earned salary,a cost-of-living allowance,a housing allowance,a home leave allowance that permits him to return home once each year,and an education allowance to pay for U.S.schooling for his son.Stan and his wife,Jennifer,have rented an apartment in Paris and paid French income taxes.What tax issues does Stan need to consider when preparing his tax return?

Accepted Answer

The answer of In January of the current year,Stan Signowski's...

Question 13

Identify which of the following statements is false.

Accepted Answer

The answer of Identify which of the following statements is...

Question 14

Michael,a U.S.citizen,earned $100,000 of foreign-earned income and no other U.S.or foreign income in 2013.He also incurred $10,000 of employment-related expenses,none of which were reimbursed.If the full foreign-earned income exclusion is utilized,calculate the deductible employment-related expense (before the 2% nondeductible floor).

Accepted Answer

The answer of Michael,a U.S.citizen,earned $100,000 of foreign-earned income and...

Question 15

A U.S.citizen,who uses a calendar year as his tax year,is transferred to a foreign country by his employer.The U.S.citizen arrived in the foreign country on November 3 of last year.Residency is expected to be maintained in the foreign country until August 4 of next year.None of the years are a leap year.The first year for which an earned income exclusion can be claimed is

Accepted Answer

The answer of A U.S.citizen,who uses a calendar year as...

Question 16

U.S.citizen who has a calendar tax year establishes a tax home and residence in a foreign country and qualifies for the foreign-earned income exclusion for 60 days in 2010;365 days in 2011;and 60 days this year,2012.The maximum earned income exclusion for this year is?

Accepted Answer

To qualify for the foreign-earned income exclusion, one must pass either the physical presence test or the bona fide residence test. In this case, the individual passed the bona fide residence test for tax years 2011 and 2012 by establishing a tax home and residence in a foreign country. This means they can claim the maximum exclusion amount for the tax year, which for 2021 is $108,700. However, since they only qualified for the exclusion for 60 days in 2010, the maximum exclusion for that year would prorate to $16,044 (60/365 x $108,700). Therefore, the total maximum exclusion for the three years is $108,700 + $108,700 + $16,044 = $233,444.

Question 17

Identify which of the following statements is false.

Accepted Answer

The answer of Identify which of the following statements is...

Question 18

Perry,a U.S.citizen,is transferred by his employer to Japan for a three-year assignment.Which one of the following items is not excluded under Sec.911?

Accepted Answer

Premiums paid on the first $50,000 of group term life insurance are not excluded under Sec. 911. The other options, base salary, cost-of-living allowance, and housing costs, can be excluded under Sec. 911 as foreign earned income.

Question 19

Identify which of the following statements is true.

Accepted Answer

An individual who is a resident alien of the United States is taxed on his or her worldwide income at the same tax rates that would apply to a U.S. citizen. The other statements are false. A foreign national is taxed as a resident alien if he or she meets either the lawful permanent resident test or the substantial presence test, not just the closer connection test. To obtain resident status, an alien must meet either the lawful permanent resident test or the substantial presence test, not both.

Question 20

Jose,a U.S.citizen,has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?

Accepted Answer

The answer of Jose,a U.S.citizen,has taxable income from U.S.sources of...

Quiz 16: Us Taxation of Foreign-Related Transactions

The physical presence test method of qualifying for the foreign-earned income exclusion requires the

Identify which of the following statements is true.

Marcella,an alien individual,is present in the United States for 122 days this year and 122 days each in the past two years.Does she satisfy both the 31-day and 183-day requirements for U.S.Residency status?

U.S.citizen Patrick is a bona fide resident of a foreign country for all of the current year.Patrick uses a calendar year as his tax year.He has $100,000 of self-employment income and incurs $20,000 in housing expenses.The base housing cost amount is $15,616.The deduction for housing expenses is

A nonresident alien earns $10,000 of dividends from a domestic corporation,which is the alien's only U.S.source income.Which one of the following statements is incorrect?

Identify which of the following statements is true.

Nonresident aliens are not allowed to claim the standard deduction.

Pedro,a nonresident alien,licenses a patent to a U.S.company for an $11 per unit fee for each unit produced.As a result of receiving the fee,Pedro must recognize the fee as

Identify which of the following statements is false.

U.S.citizen who has a calendar tax year establishes a tax home and residence in a foreign country and qualifies for the foreign-earned income exclusion for 60 days in 2010;365 days in 2011;and 60 days this year,2012.The maximum earned income exclusion for this year is?

Identify which of the following statements is false.

Perry,a U.S.citizen,is transferred by his employer to Japan for a three-year assignment.Which one of the following items is not excluded under Sec.911?

Identify which of the following statements is true.

Jose,a U.S.citizen,has taxable income from U.S.sources of $15,000 and taxable income from a foreign country of $35,000.Assume the U.S.tax rate is 25% and Jose paid $12,000 in taxes to the foreign country.What foreign tax credit can be claimed by Jose?