Phoenix Corporation Is a Controlled Foreign Corporation (CFC)incorporated in Country

question 26

Multiple Choice

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 are intended for use or consumption within Country X and have the same gross profit.Sixty percent of the widgets were sold through a Country X wholesaler that is 100% owned by Phoenix,and 40% are sold through unrelated Country X wholesalers.What amount of profits will be constructively distributed as foreign-base 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:

Board of Directors

A group of individuals elected by the shareholders of a company to oversee and make decisions on its behalf.

Revised Act

A revised act is a piece of legislation that has been amended, updated, or rewritten to reflect current standards, practices, or understanding.

Quorum

The minimum number of members needed to be present for a meeting to legally conduct business and make decisions.

Dividends

Distributions from a company to its shareholders, derived from the company's earnings or accumulated savings.