Austin Corporation, a U.S. corporation, received the following investment income during 2016: $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 2016?

Question

Quizplus · Accepted Answer

Austin Corporation has foreign source income from dividend income from the French corporation ($50,000), interest on the loan to the Dutch subsidiary ($20,000), and royalty from its 50% owned Irish venture ($20,000). These add up to $90,000 in foreign source income for the year. The capital gain on the sale of the Brazilian corporation's stock does not count as foreign source income. Therefore, the correct answer is $110,000 ($90,000 + $30,000).