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:

Question

Quizplus · Accepted Answer

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