TAX 3300 Lecture Notes - Lecture 5: Viatical Settlement, Dividend, Life Insurance

Discuss why the US has the authority to tax foreigntransactions. What is the foreign tax credit and when can it beused? The foreign earned income exclusion?

57. Which of the following circumstances would favor the foreign earned income exclusion over the foreign tax credit? a. Income is subject to a high tax rate in the foreign country. b. Income is too high to qualify for either the full exclusion or the full credit. C. 30% of foreign income is considered earned; the other 70% is investment income. d. Income is subject to a low tax rate in the foreign country.