A Controlled Foreign Corporation (CFC) Is Incorporated in Country B

question 11

Multiple Choice

A controlled foreign corporation (CFC) is incorporated in Country B, and is 100% owned by American Manufacturing Corporation. It purchases raw materials from its U.S. parent corporation, manufactures widgets, and sells 70% of the widgets to unrelated purchasers in Country A and 30% to unrelated purchasers in Country B. All widgets will be used in the countries in which they are purchased. The sales produce $100,000 of taxable income. The foreign- based company sales income reportable by American Manufacturing Corporation under the Subpart F rules is

• A) $100,000.
• B) $70,000.
• C) $0.
• D) $30,000.

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Definitions:

Id

A component of Sigmund Freud's psychoanalytic theory, representing the instinctual drives and the source of psychic energy.

Ego

In psychoanalytic theory, it represents the part of the personality that mediates between the demands of the id, superego, and reality.

Libido

A term used in psychoanalytic theory to describe the energy created by the survival and sexual instincts.

Psychodynamic

A psychological perspective that emphasizes the influence of the unconscious mind on behavior and feelings.