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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

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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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