1. Susan is a United States citizen. On January 1 of Year 1, Susan, who annually is in the 24% tax bracket, pays $500 for one of the 100 outstanding shares in Taiwan Equities ("TE"), a Taiwan corporation that invests in Asian entities not incorporated in Taiwan. Assume that the appropriate rate of interest on any amounts due is simple interest computed at 10% annually.

   1. In Year 1, TE earns $100,000. When preparing her return for Year 1, Susan files a Form 8621 that elects Qualified Electing Fund ("QEF") status. What are the U.S. tax implications to Susan?

   2. Assume that in the following year, which is Year 2, TE again earns $100,000. On December 31 of Year 2, TE distributes $2,000 to Susan. What are the U.S. tax implications to Susan?

   3. Continue to assume that TE earns $100,000 in Year 1 and $100,000 in Year 2, but that Susan never makes a QEF election. Moreover, on December 31 of Year 2, without having received a dividend, Susan sells her TE share for $2,500. What are the United States tax implications to Susan?