WorldCo, a foreign corporation not engaged in a U.S. trade or business, receives $50,000 in interest income from deposits with the foreign branch of a U.S. bank. The U.S. bank earns 78% of its income from foreign sources. How much of WorldCo's interest income is U.S. source?

Question

Quizplus · Accepted Answer

Interest income received by a foreign corporation from deposits in a foreign branch of a U.S. bank is generally not considered U.S. source income. Since WorldCo is not engaged in a U.S. trade or business and the income is from a foreign branch, the interest income would not be considered U.S. source.

WorldCo, a Foreign Corporation Not Engaged in a U