Which of the Following Statements Regarding the Sourcing of Dividend

question 79

Multiple Choice

Which of the following statements regarding the sourcing of dividend income is true?

• A) Dividends are sourced based on the residence of the recipient.
• B) Dividends from non-U.S. corporations are always foreign source.
• C) Dividends from non-U.S. corporations are foreign-source only to the extent that 80% or more of the non-U.S. corporation's gross income for the three years preceding the year of the dividend payment was effectively connected with the conduct of a non-U.S. trade or business.
• D) A percentage of dividends from non-U.S. corporations are U.S. source to the extent that 25% or more of the non-U.S. corporation's gross income for the three years preceding the year of the dividend payment was effectively connected with the conduct of a U.S. trade or business.

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Definitions:

Allowance for Doubtful Accounts

An accounting provision made to account for customers' invoices that may not be collectible in the future.

Partial Balance Sheet

An abbreviated balance sheet that shows a snapshot of a company’s financial position at a specific point in time, focusing on specific items.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year.

Notes Receivable

Financial assets representing amounts owed to the company by others, where the terms of repayment are defined in formal documents called notes.