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

question 9

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

---

Definitions:

Common Stock

A type of equity security that represents ownership in a company, with rights to vote and share in dividends.

Statement of Financial Position

Another term for the balance sheet, detailing a company's financial status including assets, liabilities, and equity at a specific point in time.

ROA

Return on Assets; a profitability ratio that measures how efficiently a company can manage its assets to produce profits during a period.