Question

Austin Corporation, a U.S. corporation, received the following investment income during the current year: $50,000 of dividend income from ownership of stock in a French corporation, $20,000 interest on a loan to its Dutch subsidiary, $40,000 royalty from its 50 percent owned Irish venture, and $30,000 capital gain from sale of its stock in a Brazilian corporation. How much of Austin's income is treated as foreign source

Answer 1

Answer:

Austin's income is treated as a foreign source    $110,000

Explanation:

The computation of the amount of income treated as the foreign source is given below;

Dividend income arise from the ownership of stock in a French corporation        $50,000

Add: Interest on a loan to its Dutch subsidiary      $20,000

Add: Royalty from its 50 percent owned Irish venture $40,000

Austin's income is treated as a foreign source    $110,000