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<ol><li>Susan is a United States citizen. On January 1 of Year 1, Susan, who annually is in the 24%

tax bracket, pays $500 for one of the 100 outstanding shares in Taiwan Equities ("TE"), a Taiwan corporation that invests in Asian entities not incorporated in Taiwan. Assume that the appropriate rate of interest on any amounts due is simple interest computed at 10% annually.</li><li>In Year 1, TE earns $100,000. When preparing her return for Year 1, Susan files a Form 8621 that elects Qualified Electing Fund ("QEF") status. What are the U.S. tax implications to Susan?</li><li>Assume that in the following year, which is Year 2, TE again earns $100,000. On December 31 of Year 2, TE distributes $2,000 to Susan. What are the U.S. tax implications to Susan?</li><li>Continue to assume that TE earns $100,000 in Year 1 and $100,000 in Year 2, but that Susan never makes a QEF election. Moreover, on December 31 of Year 2, without having received a dividend, Susan sells her TE share for $2,500. What are the United States tax implications to Susan?</li></ol>

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