A US Citizen Worked in a Foreign Country for the Period

question 42

Multiple Choice

A U.S. citizen worked in a foreign country for the period July 1, 2013 through August 1, 2014. Her salary was $10,000 per month. Also, in 2013 she received $5,000 in dividends from foreign corporations (not qualified dividends) . No dividends were received in 2014. Which of the following is correct?

• A) The taxpayer cannot exclude any of the income because she was not present in the foreign country more than 330 days in either 2013 or 2014.
• B) The taxpayer can exclude a portion of the salary from U.S. gross income in 2013 and 2014, and all of the dividend income.
• C) The taxpayer can exclude from U.S. gross income $60,000 salary in 2013, but in 2014 the taxpayer will exceed the twelve month limitation and, therefore, all of the 2014compensation must be included in gross income. All of the dividends must be included in 2013 gross income.
• D) The taxpayer must include the dividend income of $5,000 in 2013gross income, but the taxpayer can exclude a portion of the compensation income from U.S. gross income in 2013 and 2014.
• E) None of the above.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent or salaries, providing predictability for budgeting.

Responsibility Accounting

A system of accounting that segments financial information by areas of responsibility, allowing managers to be held accountable for their areas' financial performance.

Not-for-Profit Entities

Organizations that operate for purposes other than making a profit, often focusing on social, educational, or charitable endeavors.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.