Question

Fred currently earns $10,800 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $11,800 per month if he accepts the assignment. Assume that the maximum foreign-earned income exclusion for next year is $107,600. c-2. If Fred’s employer also provides him free housing abroad (cost of $16,900 next year), how much of the $16,900 is excludable from Fred’s income? Assume that Fred will be abroad for 305 days out of 365 days next year. (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Answer 1

Fred currently earns per month	$10800
if go to abroad earns per month	$ 11800
maximum foreign-earned income exclusion	$107,600
cost free housing in abroad	$ 16900

fred not go to abroad the entire year the foregin housing excusion is also reduced
cost must exceed (107600*305/365) *16%	$ 14386
Max exclusion (107600*305/365) 14%	$ 12588
fred may exclude the lessor of
a) 16900-14386	$ 2514
b)	$ 12588
included in gross income	$ 15102