Russell Starling, an Australian citizen and resident, received the following investment income during 2018: $5,000 of dividend income from ownership of stock in a U.S. corporation, $10,000 interest from a certificate of deposit in a U.S. bank, $3,000 of interest income earned from a loan to Clint Westwood, a U.S. citizen, and $2,000 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 in 2018?

Question

Quizplus · Accepted Answer

Russell will be subject to U.S. tax on the $5,000 dividend income and the $3,000 interest income from Clint Westwood. The interest earned from a deposit in a U.S. bank is exempt from U.S. taxation. The capital gain is exempt from U.S. tax because it is foreign source income.

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