ForCo, a non-U.S. corporation based in Aldonza, purchases widgets from USCo, Inc., its U.S. parent corporation.
The widgets are sold by ForCo to an unrelated foreign corporation in Aldonza. The income from sale of the widgets by ForCo is Subpart F foreign base company sales income.

Question

Quizplus · Accepted Answer

The income from the sale of the widgets by ForCo would not be considered Subpart F foreign base company sales income because the sale is between ForCo and an unrelated foreign corporation in Aldonza. Subpart F income typically targets income earned by controlled foreign corporations (CFCs) from artificial transactions designed to shift profits out of the United States, such as sales involving related parties, not sales to unrelated foreign corporations.

ForCo, a Non-U