14 What are the highest tax rates for each of the following

14. What are the highest tax rates for each of the following scenarios?

____. Operating income from a hotel earned by a foreign corporation (excluding branch profits tax)

____. Interest income earned by a foreign corporation from a US borrower

____. Net rental income earned by an U.S. individual (exclude the passthrough deduction)

____. Capital gain earned by an U.S. individual

____. Interest income earned by a U.S. corporation

____. Capital gain earned by an U.S. corporation

____. Depreciation recapture on the sale of U.S. real estate (Section 1250 property) for an individual

____. Depreciation recapture on the sale of U.S. real estate (Section 1245 property) for an individual

15. Identify the following as \"ECI\" (effectively connected income) or \"Not ECI\" (not effectively connected income) if earned by a foreign person: _

_______Rental income from an actively managed storage center in Florida

________ Interest income from loans to non-U.S. corporate borrowers.

_______ A dividend received from a US corporation.

________ A gain on the sale of a shopping center located in Bermuda.

16. Circle the higher U.S. tax rate or do not circle anything if they are the same:

Interest income to a U.S. individual OR Interest income to a non-U.S. (foreign) individual

Interest income to a tax exempt organization OR Dividend income to a U.S. individual

Capital gain income to a U.S. corporation OR UBTI to a tax exempt corporation

Capital gain income to a U.S. individual OR Interest income to a non-U.S. (foreign) individual

Solution

ANS 14.

30% Operating income from a hotel earned by a foreign corporation (excluding branch profits tax)

39.6%. Interest income earned by a foreign corporation from a US borrower

20%. Net rental income earned by a U.S. individual (exclude the passthrough deduction)

35% Capital gain earned by a U.S. individual

35 Interest income earned by a U.S. corporation

29.4% Capital gain earned by an U.S. corporation

25% Depreciation recapture on the sale of U.S. real estate (Section 1250 property) for an individual

____. Depreciation recapture on the sale of U.S. real estate (Section 1245 property) for an individual

ANS 15

ECI-Rental income from an actively managed storage center in Florida

ECI- Interest income from loans to non-U.S. corporate borrowers.

ECI- A dividend received from a US corporation.

Not ECI - A gain on the sale of a shopping center located in Bermuda.

ANS-16

Interest income to a U.S. individual OR Interest income to a non-U.S. (foreign) individual