MED MULTINATIONAL TAXATION #4 Calculate the U.S. source income where a foreign taxpayer has 4 million...

MED MULTINATIONAL TAXATION #4

Calculate the U.S. source income where a foreign taxpayer has 4 million in effectively connected income, 5 million in fixed and determinable, annual or periodic income and 8 million in other net income.

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Expert Solution

The income earned in an offshore company is U.S. source income. In general, US source income refers to dividend and interest income earned on securities issued by US companies or US registered mutual funds as well as interest earned on US Treasury obligations and US Government agency securities. Non-US persons i.e. Foreign Taxpayers who receive US source income are subject to US tax withholding.

Effectively Connected Income (ECI) refers to the income earned from all sources within United States by a foreign person in connection to a trade or business in US.

Thus, keeping the above definitions in consideration , the total US source income amounts to:

ECI = 4 Million

Fixed & determinable, Annual Or periodic Income = 5 Million

Total US source income = 9 Million

Note: Since there is no additional information given regarding the other net income of 8 Million, it has been assumed that the same is not a US source income.

ekkarill92 answered 9 months ago

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