Phoenix Corporation Is a Controlled Foreign Corporation (CFC)incorporated in Country

question 26

Multiple Choice

Phoenix Corporation is a controlled foreign corporation (CFC) incorporated in Country X.It is 100% owned by its U.S.parent corporation.Phoenix has $80,000 of taxable income from the sale of widgets that were purchased from their U.S.parent corporation.All widgets are intended for use or consumption within Country X and have the same gross profit.Sixty percent of the widgets were sold through a Country X wholesaler that is 100% owned by Phoenix,and 40% are sold through unrelated Country X wholesalers.What amount of profits will be constructively distributed as foreign-base company sales income to the U.S.parent company?

• A)$0
• B)$32,000
• C)$48,000
• D)$80,000

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Definitions:

Spermatid

An immature male gamete or reproductive cell that develops into a mature spermatozoon.

Spermicide

A chemical product used during sexual intercourse to kill sperm, thereby reducing the likelihood of pregnancy.

Ejaculatory Duct

A duct through which semen is ejected into the urethra before being expelled from the body during ejaculation.

Seminal Duct

A duct through which semen is discharged, including the vas deferens and the ejaculatory ducts.