Fabio, a citizen and resident of Paraguay, is a professional model. Last summer, Fabio posed in front of the Washington Monument for the cover of a forthcoming romance novel to be published exclusively in Paraguay by a

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 48P
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Fabio, a citizen and resident of
Paraguay, is a professional model.
Last summer, Fabio posed in front
of the Washington Monument for
the cover of a forthcoming
romance novel to be published
exclusively in Paraguay by a
Paraguayan publisher that is not
engaged in a trade or business
within the United States. The
photo shoot took only a single
day and Fabio received total
compensation of $2,000 under a
contract with a US modeling
company which performed the
photo shoot on behalf of the
Paraguayan publisher.
Group of answer choices
A-Fabio owes no US tax.
B-Fabio owes US tax at the
regular Code sec 1 rates.
C-Fabio owes US tax at a 30%
rate under Code sec 871(a).
D-The US modeling company
does not have to withhold under
Code sec 1441 on the payment.
Transcribed Image Text:Fabio, a citizen and resident of Paraguay, is a professional model. Last summer, Fabio posed in front of the Washington Monument for the cover of a forthcoming romance novel to be published exclusively in Paraguay by a Paraguayan publisher that is not engaged in a trade or business within the United States. The photo shoot took only a single day and Fabio received total compensation of $2,000 under a contract with a US modeling company which performed the photo shoot on behalf of the Paraguayan publisher. Group of answer choices A-Fabio owes no US tax. B-Fabio owes US tax at the regular Code sec 1 rates. C-Fabio owes US tax at a 30% rate under Code sec 871(a). D-The US modeling company does not have to withhold under Code sec 1441 on the payment.
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