Zhang, an NRA Who Is Not a Resident of a Treaty

question 112

Multiple Choice

Zhang, an NRA who is not a resident of a treaty country, receives taxable dividends of $50,000 from U.S. corporations. Zhang does not conduct a U.S. trade or business. Zhang's dividends are subject to withholding by the payor of:

• A) 35%.
• B) 30%.
• C) 15%.
• D) 0%.

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Definitions:

Call Option

An economic deal that permits the buyer to have the option to acquire a stock, bond, commodity, or another asset at a predetermined price during a designated period, without being obligated to do so.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a set price within a specific time.

Warrant

An instrument that gives the holder the right, but not the obligation, to buy or sell a certain asset at a specified price prior to or on a specific date.

Exercise Price

The specified price at which the option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.