A Foreign Corporation Is Owned by Five Unrelated Individuals

question 51

Multiple Choice

A foreign corporation is owned by five unrelated individuals. John, Sam, and David are U.S. citizens who own 30%, 18% and 9%, respectively, of the foreign corporation's single class of stock. Alberto and Manuel are nonresident aliens who own 37% and 6%, respectively, of the foreign corporation's stock. Which of the following statements is true?

• A)There are three "U.S. shareholders" and the foreign corporation is a controlled foreign corporation (CFC).
• B)There are three "U.S. shareholders" and the foreign corporation is not a controlled foreign corporation (CFC).
• C)There are two "U.S. shareholders" and the foreign corporation is not a controlled foreign corporation (CFC).
• D)There are two "U.S. shareholders" and the foreign corporation is a controlled foreign corporation (CFC).

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Definitions:

Executory

Pertaining to contracts or agreements that are not yet fully performed or completed by all involved parties.

Enforce

To compel observance of or obedience to a law, rule, or obligation.

Minor

An individual under the age of majority, legally considered not yet fully capable of taking on certain responsibilities and rights.

Contractual Purposes

The intended aims or goals that parties seek to achieve through entering into a contract.