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:

Passive Approach

A strategy or method in various contexts, including investing or policy-making, that involves minimal or no intervention.

Aggregate Supply Curve

Represents the total supply of goods and services that firms in an economy plan to sell during a specific time period at different price levels, usually upward sloping, indicating a positive relationship between price level and output.

Aggregate Demand Curve

represents the total demand for all goods and services in an economy at different price levels, typically downward sloping.

Prices

The amount of money required to purchase goods or services, representing the value placed on those items.