Rodrigo Alexander is a resident and citizen of Peru and lives in Lima, Peru. Based on the
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Rodrigo Alexander is a resident and citizen of Peru and lives in Lima, Peru. Based on the advice of a trusted financial planner, Rodrigo opens a brokerage account with Trading Pioneers Investment Bank in New York in order to trade in U.S. stocks and securities.
Rodrigo frequently trades stocks and securities through a brokerage account in New York.
- 22. In 2020, Rodrigo purchased 1,000 shares in Super Technologies Inc., a California corporation, for $100 per share. In 2021, Super Technologies pays a dividend of $1 per share. What is the U.S. tax consequence to Rodrigo on the $1,000 of dividend income received from the investment in Super Technologies?
- The $1,000 of dividend income is subject to U.S. net income tax
- The $1,000 of dividend income is subject to gross U.S. withholding tax at 30%
- No tax because dividends are subject to the DRD
- No tax because the dividend is paid by a U.S. corporation
- 23. In 2021, Rodrigo sold the 1,000 shares for $200 per share. What is the U.S. tax consequence to Rodrigo on the sale of the shares in in Super Technologies?
- The $100,000 of capital gain is subject to U.S. net income tax because the gain is from a trading business in the U.S.
e) The $100,000 of capital gain is subject to gross U.S. withholding tax at 30% because the gain is from shares of a U.S. corporation
- No U.S. tax because the gain is qualified dividend income
- No U.S. tax because the gain is from trading a security for Rodrigo’s own account
- 24. In 2020, Rodrigo purchased 1,000 bonds issued by Exotic Beverage Inc., a California corporation. Rodrigo does not own any equity interest in Exotic Beverage. In 2021, Exotic Beverage pays a interest of $25 per bond. What is the U.S. tax consequence to Rodrigo on the $25,000 of interest income received from the bonds issued by Exotic Beverage?
- The $25,000 of interest income is subject to U.S. net income tax
- The $25,000 of interest income is subject to gross U.S. withholding tax at 30%
- No U.S. tax because Rodrigo does not own any equity interest in Exotic Beverage
- No U.S. tax because the interest is not U.S. source
- 25. Eduardo Ballios, a citizen and resident of Singapore, purchased real property in Nevada for $2 million. In 2021, Eduardo sells the building for $3.1 million, but has expenses related to the sale of $100,000, for a total net gain of $1 million. How is Eduardo taxed on the sale for U.S. tax purposes?
- The $1 million of gain is subject to U.S. net income tax because the gain is from a trade or business in the U.S.
- The $1 million of gain is subject to gross U.S. withholding tax at 30% because the gain is from a U.S. real property
- No U.S. tax because paying U.S. tax is voluntary
- No U.S. tax because the gain is not U.S. source FDAP income
Related Book For
South Western Federal Taxation 2015
ISBN: 9781305310810
38th edition
Authors: William H. Hoffman, William A. Raabe, David M. Maloney, James C. Young
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