Hank is a U.S.citizen and is doing a three- to six-year assignment as a sales executive in Paris for a French company, which began this year.Hank earned $109,500 working for the French company this year but only lived in France for 180 days (out of 365 days).He will live full time in France next year.What amount of Hank's $109,500 salary this year will he be allowed to exclude from gross income in the United States (rounded to the nearest $100)?
A)Hank can exclude his entire salary because he worked more than 330 days overseas
B)$102,000
C)$52,200
D)$105,900
E)None of his salary can be excluded from gross income because Hank must reside overseas for the entire year

Question

Quizplus · Accepted Answer

Hank can exclude a portion of his foreign earned income under the Physical Presence Test, which requires him to be present in a foreign country for at least 330 full days during a 12-month period. Since he only lived in France for 180 days this year, he does not meet this requirement. However, he can prorate the exclusion based on the number of qualifying days. The maximum exclusion for 2023 is $120,000, so the prorated exclusion is ($120,000 * 180/365) = $52,200.

Hank Is a U