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What is the US tax consequence to Rodrigo

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Reference no: EM133079635

Question - Rodrigo Alexander is a resident and citizen of Peru and lives in Lima, Peru. Based on the advice of a trusted financial planner, Rodrigo opens a brokerage account with Trading Pioneers Investment Bank in New York in order to trade in U.S. stocks and securities. Rodrigo frequently trades stocks and securities through a brokerage account in New York.

In 2020, Rodrigo purchased 1,000 shares in Super Technologies Inc., a California corporation, for $100 per share. In 2021, Super Technologies pays a dividend of $1 per share. What is the U.S. tax consequence to Rodrigo on the $1,000 of dividend income received from the investment in Super Technologies?

a) The $1,000 of dividend income is subject to U.S. net income tax

b) The $1,000 of dividend income is subject to gross U.S. withholding tax at 30%

c) No tax because dividends are subject to the DRD

d) No tax because the dividend is paid by a U.S. corporation

Reference no: EM133079635

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