A USCitizen Worked in a Foreign Country for the Period July

question 50

Multiple Choice

A U.S.citizen worked in a foreign country for the period July 1,2009 through August 1,2010.Her salary was $10,000 per month.Also,in 2009 she received $5,000 in dividends from foreign corporations (not qualified dividends) .No dividends were received in 2010.Which of the following is correct?

• A)The taxpayer can exclude $60,000 from U.S.gross income for 2009 because the total salary earned in the foreign country in 2009 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 2009 and 2010,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 2009,but in 2009 the taxpayer will exceed the twelve month limitation and,therefore,all of the 2010 compensation must be included in gross income.All of the dividends must be included in 2009 gross income.
• D)The taxpayer can exclude a portion of the salary from U.S.gross income in 2009 and 2010,and all of the dividend income.
• E)None of the above.

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Definitions:

Indirect Labor

Labor costs not directly associated with the manufacture of products or performance of services, such as maintenance and supervision.

Activity Rate

A rate that determines the cost driver of a particular activity, used in activity-based costing to allocate costs to products or services.

Supervising

The act of overseeing and managing employees or processes to ensure that tasks are completed efficiently and effectively.

First Stage Allocations

The initial process in cost accounting of assigning overhead costs to different departments or cost pools.