Fred currently earns $9,000 per month. Fred has been offered the chance to transfer for three to five yearsto an overseas affiliate. His employer is willing to pay Fred $10,000 per month if he accepts the assignment. Assume that the maximum foreign earned income exclusion for next year is $99,200.

a. How much U. S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas for the entire year? If Fred’s employeralso provides him free housing abroad (cost of $18,000), how much of the $18,000 isexcludible from Fred’s income?
b. Suppose that Fred’s employer has only offered Fred a six-month overseas assignmentbeginning on January 1 of next year. How much U. S. gross income will Fred report next year if he accepts the six-month assignment abroad and returns home on July 1 of next year?