Which of the Following Statements Regarding Controlled Foreign Corporations Is

question 72

Multiple Choice

Which of the following statements regarding controlled foreign corporations is true?

• A) U.S. shareholders are taxable on any income earned by a controlled foreign corporation.
• B) U.S. shareholders are never taxable on income earned by a controlled foreign corporation until such income is distributed to the shareholders.
• C) U.S. shareholders of a controlled foreign corporation can increase their basis by the amount of any constructive distributions from the corporation.
• D) Controlled foreign corporations are taxable in the United States on their worldwide income.

---

Definitions:

World's Greatest Power

A term often used to describe a nation or state that holds dominant economic, military, and political influence globally.

Korean War

A conflict from 1950 to 1953 between North Korea, supported by China and the Soviet Union, and South Korea, supported by the United Nations, primarily the United States.

Thirty-Eighth Parallel

A line of latitude that is often referred to as the pre-Korean War boundary between North Korea and South Korea.

Defensive Alliance

An agreement between nations to provide mutual support in case one of them is attacked by a third party.