Russell Starling, an Australian citizen and resident, received the following investment income during the current year: $5,080 of dividend income from ownership of stock in a U.S. corporation, $10,400 interest from a certificate of deposit in a U.S. bank, $3,200 of interest income earned from a loan to Clint Westwood, a U.S. citizen, and $2,100 capital gain from sale of a stock in a U.S. corporation. How much of Russell's income will be subject to U.S. taxation?

Question

Quizplus · Accepted Answer

Only Russell's U.S. source income is subject to U.S. taxation. Therefore, only the dividend income, interest income and capital gain income are taxable in the U.S. The dividend income ($5,080), interest income ($10,400) and capital gain income ($2,100) are all U.S. source income and subject to U.S. taxation. The interest income from the loan to Clint Westwood is not U.S. source income and therefore not subject to U.S. taxation.

Total taxable income = $5,080 + $10,400 + $2,100 = $17,580

Therefore, the correct answer is (D) $8,280.

Russell Starling, an Australian Citizen and Resident, Received the Following