Megan Accepts an Assignment Working in Germany for the First

question 17

Multiple Choice

Megan accepts an assignment working in Germany for the first 9 months of 2018 from Ferguson Corporation. Ferguson Corporation paid Megan's salary of $78,000 plus an additional $7,000 bonus. Megan paid $5,000 to the German government in taxes on this income. During 2018, Megan also earned $9,000 of interest income from corporate bonds and $4,000 of dividend income from U.S. corporations. The maximum foreign earned income exclusion for 2018 is $103,900. How much should Megan include in her gross income on her U.S. tax return for 2018?

• A) $98,000
• B) $20,000
• C) $13,000
• D) zero

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Definitions:

Asset Exchange Transaction

A transaction where one asset is given up in exchange for another asset, with both having a measurable fair value.

Acquired Assets

Assets obtained through purchase or merger by a company.

Double-Declining Balance

An accelerated method of depreciation that doubles the rate at which an asset's book value is reduced over time, reflecting quicker loss of value.

Straight-Line Depreciation

A technique for apportioning the price of a physical asset over its effective duration in steady annual portions.