Rick Rocker, a nonresident alien, is interested in performing a rock concert in Chicago. A promoter...

Rick Rocker, a nonresident alien, is interested in performing a rock concert in Chicago. A promoter in the United States ("Promoter") has agreed to pay $1 million to Rocker to perform. Rocker himself incurs $400,000 in expenses in connection with the concert. Which of the following statements is true?

Question 18 options:

1)	Promoter must withhold $300,000 on the fixed, determinable, annual, or periodic income paid to Rocker.

2)	Promoter must withhold $180,000 on the effectively connected net income paid to Rocker.

3)	Promoter does not have any withholding obligation on the income paid to Rocker.

4)	Promoter must submit Form 8233, Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual.

Expert Solution

A non resident alien (for tax purpose) is to be paid tax on the income earned in U.S. A non resident alien is allowed to deduct expense from the total income earned which is related to his service.

Income = $ 100,000

Less: Expense = $ 400,000

Taxable Income= $ 600,000

Tax = $ (600,000 *30%)

= $ 180,000

Option B is correct Promoter must withhold $ 180,000 on the effectively connected net income to Rocker.

ekkarill92 answered 2 years ago

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