Jimmy Johnson, a U

question 66

Essay

Jimmy Johnson, a U.S. citizen, is employed by General Motors Corporation, a U.S. corporation. In June 2014, General Motors relocated Jimmy to its operations in Germany for the remainder of 2014. Jimmy was paid a salary of $250,000. As part of his compensation package for moving to Germany, Jimmy received a cost of living allowance of $30,000, which was paid to him only while he worked in Germany. Jimmy's salary was earned ratably over the twelve month period. During 2014 Jimmy worked 260 days, 130 of which were in Germany and 130 of which were in the United States. How much of Jimmy's total compensation is treated as foreign source income for 2014?

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Definitions:

MC

Stands for Marginal Cost, which is the cost of producing one additional unit of a good or service.

ATC

Average Total Cost, which is the total cost per unit of output incurred when producing goods or services. It includes both fixed and variable costs.

MR

An abbreviation for Marginal Revenue, which is the additional income from selling one more unit of a good or service.

Long-Run Equilibrium

A situation in a market where supply equals demand, and all factors of production - including labor and capital - are fully utilized, leading to stable prices.