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Tax Questions (FEI Rules, Computing Tax, and More...)

1) Mr. A works in Germany for XYZ contracting, an American corporation. He is single and has no dependents. He takes the standard deduction. He made $100,000 in 2009.
He did not leave Germany in the year 2009.
A) How much of his income can he exclude under the FEI rules?
B) Assuming that he has no other income, what is his tax for 2009?
(Show your computations.)

2) Ms. C works in Japan for WXY contracting, an American corporation. She is single and has no dependents. She takes the standard deduction.
She made $100,000 in 2009. She arrived in Japan on January 1, 2009 to begin her assignment. She was a WXY headquarters in Las Vegas for training from February 1-21 and again on April 1-7. She was in Honolulu for vacation from October 1-14. She made an emergency trip home to North Dakota to see Grandma C (who, unfortunately, is in failing health) from December 14-31.
A) How much of her income can she exclude under the FEI rules?
B) Assuming that she has no other income, what is her tax for 2009?

3) Ms. E., a single individual, had $125,000 in adjusted gross income in 2009. She uses the standard deduction. Compute her tax assuming that the $125,000 includes $14,000 in capital gains.

Solution Preview

1)
A. Under FEI rule, individuals can exclude up to 91,400 of foreign-earned income from gross income. Mr. A did not leave Germany in the year 2009. So he is entitled to exclude 91,400 from his gross income.
B. Gross income 100,000
FEI exclusion (91,400)
AGI 8,600
...

Solution Summary

FEI rules and computing tax is examined for a German company in the solution.

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