David, an Employee of Lima Corporation, Is a U

question 147

Multiple Choice

David, an employee of Lima Corporation, is a U.S. citizen and the regional sales manager for South America. His office is in Miami and he spends nine months each year on business in South America. Which of the following statements about the treatment of his income from Lima Corporation is correct?

• A)He must include his Lima income in his gross income and is not allowed a tax credit for any South American taxes paid.
• B)He has the option of either excluding $104,100 of his Lima income or taking a tax credit for the South American taxes paid.
• C)Because he is in South America only nine months of the year, he is only allowed to exclude $75,975 of Lima income.
• D)Because he is in South America only nine months of the year, he is not allowed to exclude any of his Lima income, but he can take a tax credit for any South American taxes paid.

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

Perfectly Inelastic

Describes a situation in which the quantity demanded or supplied does not change in response to a price change.

Demand Determined

implies that the quantity and price of goods and services are decided by the consumers' demand or preferences in the market.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.