John Lawrence Bailey is employed in Country T by American Conglomerate Corporation. Bailey has resided with his
Question:
John Lawrence Bailey is employed in Country T by American Conglomerate Corporation. Bailey has resided with his wife and three children in Country T for seven years. He made one five-day business trip back to the United States in the current year, and $2,000 of his salary (but none of the allowances) is allocable to the U.S. business trip. Bailey reports the following tax-related information for the current year:
Income:
Base salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Overseas premium in addition to base salary . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Cost-of-living allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,500
Housing allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Education allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Home leave travel allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000
Income tax reimbursement from employer for preceding tax year . . . . . . . 25,000
Expenditures:
Tuition at U.S. school . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Housing expenses (rental of home and related expenses) . . . . . . . . . . . . . . . . 32,500
Itemized deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10,000
Foreign income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,000
Complete a 2019 Form 2555 for the Baileys’ current tax year. Assume Mr. Bailey established foreign residency in 2015, and all prior tax returns were filed with a Form 2555 claiming that Mr. Bailey was a bona fide foreign resident.
Step by Step Answer:
Federal Taxation 2021 Corporations, Partnerships, Estates & Trusts
ISBN: 9780135919460
34th Edition
Authors: Timothy J. Rupert, Kenneth E. Anderson, David S. Hulse