ForCo, a subsidiary of a U.S. corporation incorporated in Belgium, manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany. The income from the sale of widgets is not Subpart F foreign base company sales income.

Question

Quizplus · Accepted Answer

The income from the sale of widgets is not considered Subpart F foreign base company sales income because both the manufacturing and the sale occur between subsidiaries outside the U.S., and the manufacturing subsidiary (ForCo) is incorporated in the same country (Belgium) where the manufacturing takes place, which does not meet the criteria for Subpart F income as defined by the U.S. tax code.

ForCo, a Subsidiary of a U