Quest is organized and operates in the U.K.Its U.S.effectively connected earnings for the taxable year are $900,000 and its net U.S.equity has increased by $40,000.Quest's dividend equivalent amount for the tax year is $860,000.

Question

Quizplus · Accepted Answer

The dividend equivalent amount is included in the effectively connected earnings calculation for determining U.S. taxable income. Therefore, Quest's dividend equivalent amount of $860,000 is already factored into the $900,000 of effectively connected earnings, and there is no need to add it separately. The increase in net U.S. equity is also not relevant to calculating the dividend equivalent amount.

Quest Is Organized and Operates in the U