Scenario #2: John works as a manager for a large multinational corporation in Australia where he resides with his wife Linda and their young child. He was recently given oversight for one of the company's largest North American subsidiaries located in the U.S. During Year 1, John spent 35 days working in the U.S. In Year 2, he spent 56 days. His wife and child stayed behind at their residence in Australia. In Year 3, after he made two trips totaling 30 days to the U.S., he returned to Australia. Soon, his boss offered him a substantial promotion to move to the U.S. and assume a top-level management position at the subsidiary. On August 1, John moved to the U.S. and assumed the new position. On August 10, just before the school year was about to start, he moved his wife and child to the U.S. They bought a house on September 1, sold their house in Australia, and after the company moved their possessions to the U.S., they made substantial noncash charitable contributions to U.S. charities. John's salary was: Year 1: $52,000; Year 2: $62,400; Year 3: $82,000 ($42,000 for the first 7 months, $40,000 for the last 5 months). He received an ITIN in Year 1. His wife and child received an ITIN after they moved to the U.S. in Year 3. Near the end of Year 3, John applied for a green card. Based on this scenario, select the correct answer for each of the following questions. 4. John knows that he is a nonresident alien for Year 1 tax purposes. His salary from the Australian headquarters was $5,000 while in the U.S. He wishes to minimize his U.S. taxes. Which of the following is a correct statement? a) He may adjust his U.S. income downward by $3,000 because he spent less than 90 days in the U.S. b) He can take the standard deduction. c) He must use the Tax Table or Tax Computation Worksheet for married filing separately returns. d) He must use the Tax Table or Tax Computation Worksheet for single individuals because his wife is not in the U.S. and does not have an ITIN. 5. John knows that he is a nonresident alien for Year 2 tax purposes. While in the U.S., his salary from the Australian headquarters was $9,600. Again, he wishes to minimize his U.S. taxes. Which of the following is a correct statement? a) He can take a personal exemption for himself and his wife. b) He may not take any personal exemptions. c) He can take personal exemptions for himself and his wife, and a dependency exemption for his child. d) He can claim the standard deduction. 6. John is quite uncertain of his U.S. tax status in Year 3. His salary from the Australian headquarters for the one month of work in the U.S. before he moved was $6,000. His salary from the U.S. subsidiary for the five months after he moved was $40,000. Which of the following statements is correct? a) He is a resident alien for the entire tax year. b) He is a dual-status taxpayer for Year 3. c) He must use married filing jointly filing status for Year 3. d) Because he became a resident alien during Year 3, his wife will also be considered a resident alien.

7. How many personal exemptions may John claim on his Year 3 tax return? a) He may only claim a personal exemption for himself. b) He may claim a personal exemption for himself and his wife. c) He may only claim a dependency exemption for his child. d) John cannot claim any personal exemptions on his Year 3 tax return.