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16 November, 19:35

ForCo, a foreign corporation not engaged in a U. S. trade or business, recognizes a $3 million gain from the sale of land located in the United States. The amount realized on the sale was $50 million. Absent any exceptions, what is the required withholding amount on the part of the purchaser of this land?

a. $0

b. $5 million

c. $3 million

d. $300,000

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Answers (1)
  1. 16 November, 19:56
    0
    Correct answer is option c. $3 million.

    Explanation:

    Step 1. Given information.

    3 million gain 50 million sales

    Step 2. Formulas needed to solve the exercise.

    The withholding amount on the part of the purchaser of this land = Total consideration value * 6%

    Step 3. Calculation.

    = $50 million * 6%

    = $3 million

    Step 4. Solution.

    Therefore correct answer is option c. $3 million.
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