Wellington,Inc.,a U.S.corporation,owns 30% of a CFC that has $50 million of earnings and profits for the current year.Included in that amount is $20 million of Subpart F income.Wellington has been a CFC for the entire year and makes no distributions in the current year.Wellington must include in gross income (before any § 78 gross-up):

Question

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Wellington must include in its gross income its pro rata share of the CFC's Subpart F income. Since Wellington owns 30% of the CFC and the CFC has $20 million of Subpart F income, Wellington must include $6 million (30% of $20 million) in its gross income.