Question

Olaf, a citizen of Norway with no trade or business activities in the United States, sells at a gain 200 shares of MicroShift, Inc., a U.S. company. The sale takes place through Olaf’s broker in Oslo. How is this gain treated for U.S. tax purposes?

Answer 1

The gain cannot be subject to tax in the US because it is foreign source income.

Step-by-step explanation:

Olaf's income will be regarded as a foreign sourced income because he is a citizen of Norway who does not trade or engage in business activities in the United States. In addition, the shares were sold not in the US but in through his broker in Oslo, Norway. The fact that the gain from the gain is from 200 shares of MicroShift, Inc. which is a U.S. company does not make it to be taxable in the U.S.