Rafael is a citizen of Spain and a resident of the United States. During the current year, Rafael received the following income:Compensation of $5 million from competing in tennis matches in the U.S.Cash dividends of $10,000 from a Spanish corporation that earns 50 percent of its income from sales in the United StatesInterest of $2,000 from a Spanish citizen who is a resident of the U.S.Rent of $5,000 from U.S. residents who rented his villa in ItalyGain of $10,000 on the sale of stock in a German corporationDetermine the source (U.S. or foreign) of each item of income Rafael received.
What will be an ideal response?
| Income | Source |
| Compensation | U.S. source |
| Dividend | Foreign source |
| Interest | U.S. source |
| Rent | Foreign source |
| Gain on the sale of stock | U.S. source |
The dividend income is foreign source because it is paid by a foreign corporation. The rent is foreign source because the property being rented is outside the U.S.
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