A U.S.citizen worked in a foreign country for the period July 1,2010 through August 1,2011.Her salary was $10,000 per month.Also,in 2010 she received $5,000 in dividends from foreign corporations (not qualified dividends) .No dividends were received in 2011.Which of the following is correct?
A) The taxpayer can exclude $60,000 from U.S. gross income for 2010 because the total salary earned in the foreign country in 2010 was less than the annual foreign earned income exclusion, but the dividends of $5,000 must be included in gross income.
B) The taxpayer can exclude a portion of the compensation income from U.S. gross income in 2010 and 2011, but must include the dividend income of $5,000 in gross income.
C) The taxpayer can exclude from U.S. gross income $60,000 salary in 2010, but in 2010 the taxpayer will exceed the twelve month limitation and, therefore, all of the 2011 compensation must be included in gross income. All of the dividends must be included in 2010 gross income.
D) The taxpayer can exclude a portion of the salary from U.S. gross income in 2010 and 2011, and all of the dividend income.
E) None of the above.
Correct Answer:
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