A USCitizen Worked in a Foreign Country for the Period July

question 30

Multiple Choice

A U.S.citizen worked in a foreign country for the period July 1, 2011 through August 1, 2012.Her salary was $10,000 per month.Also, in 2011 she received $5,000 in dividends from foreign corporations (not qualified dividends) .No dividends were received in 2012.Which of the following is correct?

• A)The taxpayer can exclude $60,000 from U.S.gross income for 2011 because the total salary earned in the foreign country in 2011 was less than the annual foreign earned income exclusion, but the dividends of $5,000 must be included in gross income.
• B)The taxpayer can exclude a portion of the compensation income from U.S.gross income in 2011 and 2012, but must include the dividend income of $5,000 in gross income.
• C)The taxpayer can exclude from U.S.gross income $60,000 salary in 2011, but in 2011 the taxpayer will exceed the twelve month limitation and, therefore, all of the 2012 compensation must be included in gross income.All of the dividends must be included in 2011 gross income.
• D)The taxpayer can exclude a portion of the salary from U.S.gross income in 2011 and 2012, and all of the dividend income.
• E)None of the above.

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Definitions:

Homeostasis

The self-regulating process by which biological systems maintain stability while adjusting to conditions that are optimal for survival.

Hunger Pangs

Hunger pangs are sensations of discomfort or pain in the stomach associated with a desire to eat.

Homeorhesis

The process by which a dynamic system adjusts its internal environment to maintain a stable state or trajectory, especially in the context of living organisms maintaining equilibrium.

Metastasis

The spread of cancer cells from the original site to other parts of the body, forming new tumors.