Question

Stanley holds foreign investments in foreign stocks and bonds. the issuing foreign country withheld taxes on his investment income. to avoid double taxation on the income earned from these investments, stanley may be eligible to claim which credit?

Answer 1

To avoid double taxation on foreign investment income, Stanley may be eligible to claim the foreign tax credit.

Step-by-step explanation:

To avoid double taxation on income earned from foreign investments, Stanley may be eligible to claim the foreign tax credit.

The foreign tax credit is a tax credit given to individuals or businesses to offset taxes paid to a foreign country on income earned from investments in that country.

By claiming the foreign tax credit, Stanley can reduce his tax liability in his home country by the amount of taxes already paid to the foreign country, therefore avoiding double taxation.

Answer 2

Stanley can claim the Foreign Tax Credit to avoid double taxation of his investment income from foreign stocks and bonds. This credit lessens the tax impact for taxes paid to foreign governments on investment income.

Step-by-step explanation:

To mitigate the effects of double taxation on investment income from foreign stocks and bonds, Stanley may claim the Foreign Tax Credit on his U.S. tax return. This credit is intended to reduce the tax burden on investors who are taxed by both the foreign country where the investment income was earned and their domestic tax authority. The income payments he received are part of international capital flows and are subject to taxation based on various policies that countries employ, including the imposition of Tobin taxes on certain types of international capital transfers.