P, a single taxpayer, meets the bona fide residence test while employed in New Zealand.During 2012, she has (1) wages of $52,000, (2) interest income from a local bank of $1,400, (3) interest income from a U.S.bank of $1,200, (4) dividend income from New Zealand corporate stock of $200, and (5) employer-provided housing valued at $9,600.Assume all amounts are in U.S.dollars.P has excludable foreign source income of

Question

Quizplus · Accepted Answer

1. Wages of $52,000 are taxable income, not foreign source income.
2. Interest income from a local bank of $1,400 is foreign source income and therefore excludable.
3. Interest income from a U.S. bank of $1,200 is not foreign source income and therefore not excludable.
4. Dividend income from New Zealand corporate stock of $200 is foreign source income and therefore excludable.
5. The value of employer-provided housing ($9,600) is not income and therefore not relevant for this calculation.

Total excludable foreign source income = $1,400 + $200 = $1,600

Total taxable income = $52,000 + $1,200 = $53,200

Therefore, P's excludable foreign source income is $1,600 and the best choice is B.

P, a Single Taxpayer, Meets the Bona Fide Residence Test