1.

Gloria Martinez, an NRA, is a professional golfer. She played in seven tournaments in the United States in the current year and earned $250,000 in prizes from these tournaments. She deposited the winnings in a bank account she opened in Mexico City after her first tournament win. Gloria played a total of 30 tournaments for the year and earned $800,000 in total prize money. She spent 40 days in the United States, 60 days in England, 20 days in Scotland, and the rest of the time in South America. Complete the letter to Gloria explaining how much U.S.-source income she will generate, if any, from her participation in these tournaments and whether any of her winnings are subject to U.S. taxation.

questions:

The compensation may not exceed $_________ in total for the services performed in the United States.

This exception does not apply to you this year. You are not in the United States for more than 90 days during the tax year, but the income attributable to your services performed in the United States exceeds $__________ . Furthermore, you are not performing in the capacity of an employee.

2.

IrishCo, a manufacturing corporation resident in Ireland, distributes products through a U.S. office. Current-year taxable income from such sales in the United States is $12,000,000. IrishCo's U.S. office deposits working capital funds in short-term certificates of deposit with U.S. banks. Current-year interest income from these deposits is $150,000.

IrishCo also invests in U.S. securities traded on the New York Stock Exchange. This investing is done by the home office. For the current year, IrishCo has realized capital gains of $300,000 and dividend income of $50,000 from these stock investments.

a. Compute IrishCo's U.S. tax liability, assuming that the U.S.-Ireland income tax treaty reduces withholding on dividends to 15% and on interest to 5%. Assume a 21% U.S. tax rate. $__________