In 2017, Phoenix Corporation Is a Controlled Foreign Corporation (CFC)

question 10

Multiple Choice

In 2017, 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- based company sales income to the U.S. parent company?

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

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Definitions:

Erikson

A psychologist known for his theory on the psychosocial development of human beings.

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