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

question 25

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 have the same gross profit. Sixty percent of the widgets were sold through a Country Y wholesaler that is 100% owned by Phoenix, and are destined for use in Country Y. The remaining 40% are sold through unrelated Country X wholesalers and are destined for use in Country X. What amount of profits will be constructively distributed as foreign-based 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:

Statement of Defence

A formal document filed by the defendant in a lawsuit detailing their defenses or objections to the claims made in the statement of claim.

General Partner

In a partnership, a member who has unlimited liability for the debts of the business and takes part in its management.

Limited Partner

An investor in a partnership who has limited liability to the extent of their investment and does not take part in the day-to-day management of the business.

Letterhead

The heading at the top of a sheet of letter paper, usually consisting of a name and an address, and often a logo.