Austin Corporation,a U.S.corporation,received the following investment income during 2017: $50,000 of dividend income from ownership of stock in a French corporation,$20,000 interest on a loan to its Dutch subsidiary,$40,000 royalty from its 50-percent owned Irish venture,and $30,000 capital gain from sale of its stock in a Brazilian corporation.How much foreign source income does Austin have in 2017?
A) $140,000.
B) $110,000.
C) $70,000.
D) $60,000.

Question

Quizplus · Accepted Answer

Foreign source income includes income earned by a U.S. corporation from sources outside of the United States. In this case, Austin Corporation received $50,000 of dividend income from a French corporation, $20,000 of interest from its Dutch subsidiary, and $40,000 of royalty from its 50-percent owned Irish venture, all of which are considered foreign source income. The $30,000 capital gain from the sale of its Brazilian corporation stock is not considered foreign source income. Therefore, the total foreign source income for Austin Corporation in 2017 is $50,000 + $20,000 + $40,000 = $110,000.