Windmill Corporation, a Dutch Corporation, Is Owned by the Following

question 32

Multiple Choice

Windmill Corporation, a Dutch corporation, is owned by the following unrelated persons: 50 percent by a U.S. corporation, 5 percent by a U.S. individual, and 45 percent by a Swiss corporation. During the year, Windmill earned $2,000,000 of subpart F income. Which of the following statements is True about the application of subpart F to the income earned by Windmill?

• A) Windmill is a CFC and the U.S. corporation and U.S. individual will have a deemed dividend of $1,000,000 and $100,000, respectively.
• B) Windmill is a CFC and only the U.S. corporation will have a deemed dividend of $1,000,000.
• C) Windmill is a CFC and the U.S. corporation, U.S. individual, and Swiss corporation will have a deemed dividend of $1,500,000, $100,000, and $900,000, respectively.
• D) Windmill is not a CFC and none of the shareholders will have a deemed dividend under subpart F.

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Definitions:

Production Functions

Mathematical relations stipulating how output levels are achieved with different combinations of input factors such as labor and capital.

Input

Refers to the resources used in the production of goods and services, such as labor, raw materials, and capital.

Returns To Scale

The change in output as all inputs are increased proportionally in the production process.

Inputs

The resources such as labor, materials, and capital that are used in the production process to create goods and services.