A US individual owns 60% in Australian Pty Ltd which is treated as a corporation for US tax purposes. It distributes a dividend of $1m (and thus $600k is distributed to a US individual). How does the participation exemption apply to the US individual?

Group of answer choices

As she owns more than 10%, the full $600k will be excluded from US tax.

Participation exemption doesn't apply to individuals.

Only 60% of the $600k is exempt under the participation exemption.

Participation exemption doesn't exist in the US tax system as US taxes on a worldwide basis.