Which of the Following Statements Regarding the Sourcing of Gross

question 34

Multiple Choice

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

• A)Foreign persons not engaged in a U.S.trade or business are indifferent as to whether any of their income is U.S.source.
• B)All income earned by foreign persons not engaged in a U.S.trade or business is treated as foreign source.
• C)U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S.trade or business.
• D)Certain U.S.-source investment income earned by foreign persons not engaged in a U.S.trade or business may be subject to a U.S.withholding tax.

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Definitions:

Operating Activities

Activities that are directly related to running a business and generating revenue, such as sales and purchasing materials.

Operating Expenses

Costs associated with running a business's core operations, excluding the cost of goods sold.

Depreciation Expense

The methodical distribution of the expense of a physical asset throughout its expected lifespan.

Cash Payments

Transactions that involve the outflow of cash to settle obligations or purchase goods and services.