Fred currently earns $9,100 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $10,100 per month if he accepts the assignment. Assume that the maximum foreign-earned income exclusion for next year is $108,700. 1. If Fred's employer also provides him free housing abroad (cost of $20,100), how much of the $20,100 is excludable from Fred's income? 2. Suppose that Fred's employer has offered Fred a six-month overseas assignment beginning on January 1 of next year. How much U.S. gross income will Fred report next year if he accepts the six-month assignment abroad and returns home on July 1 of next year? 3. Suppose that Fred's employer offers Fred a permanent overseas assignment beginning on March 1 of next year. How much U.S. gross income will Fred report next year if he accepts the permanent assignment abroad? Assume that Fred will be abroad for 305 days out of 365 days next year. 4. If Fred's employer also provides him free housing abroad (cost of $16,050 next year), how much of the $16,050 is excludable from Fred's income? Assume that Fred will be abroad for 305 days out of 365 days next year.

Fred currently earns $9,100 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $10,100 per month if he accepts the assignment. Assume that the maximum foreign-earned income exclusion for next year is $108,700. 1. If Fred's employer also provides him free housing abroad (cost of $20,100), how much of the $20,100 is excludable from Fred's income? 2. Suppose that Fred's employer has offered Fred a six-month overseas assignment beginning on January 1 of next year. How much U.S. gross income will Fred report next year if he accepts the six-month assignment abroad and returns home on July 1 of next year? 3. Suppose that Fred's employer offers Fred a permanent overseas assignment beginning on March 1 of next year. How much U.S. gross income will Fred report next year if he accepts the permanent assignment abroad? Assume that Fred will be abroad for 305 days out of 365 days next year. 4. If Fred's employer also provides him free housing abroad (cost of $16,050 next year), how much of the $16,050 is excludable from Fred's income? Assume that Fred will be abroad for 305 days out of 365 days next year.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 12DQ

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