Which of the Following Statements Regarding Foreign Persons Not Engaged

question 14

Multiple Choice

Which of the following statements regarding foreign persons not engaged in a U.S. trade or business is true?

• A) Foreign persons are subject to potential withholding taxes on the gross amount of U.S.-source investment income.
• B) Foreign persons with any U.S.-source income are taxed on net investment income (after expenses).
• C) Foreign persons are not subject to U.S. tax if not engaged in a U.S. trade or business.
• D) Foreign persons with only U.S.-source investment income are exempt from U.S. tax.

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Definitions:

Specified Point in Time

Refers to a particular moment or exact date that is identified for an event or action to occur.

Payback Period

The period of time required for the return on an investment to "pay back" the sum of the original investment.

Initial Cost

The first total amount of money spent to purchase or invest in a project, product, or asset, not including any subsequent costs.

Required Rate of Return

The required rate of return is the minimum annual percentage return an investor expects to achieve from an investment, considering the risk associated with it.