A USCitizen Worked in a Foreign Country for the Period July

question 57

Multiple Choice

A U.S.citizen worked in a foreign country for the period July 1, 2018 through August 1, 2019.Her salary was $10,000 per month.Also, in 2018 she received $5,000 in dividends from foreign corporations (not qualified dividends) .No dividends were received in 2019.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 2018 or 2019.
• B)The taxpayer can exclude a portion of the salary from U.S.gross income in 2018 and 2019, and all of the dividend income.
• C)The taxpayer can exclude from U.S.gross income $60,000 salary in 2018, but in 2019 she will exceed the 12- month limitation and, therefore, all of the 2019 compensation must be included in gross income.All of the dividends must be included in 2018 gross income.
• D)The taxpayer must include the dividend income of $5,000 in 2018 gross income, but she can exclude a portion of the compensation income from U.S.gross income in 2018 and 2019.
• E)None of these.

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Definitions:

Installation Costs

Expenses associated with setting up or installing equipment, machinery, or software, making them ready for use.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions, indirect expenses, and changes in working capital.

Depreciation Expense

A technique in accounting that involves spreading out the expense of a physical asset over its expected lifespan.