Identify which of the following statements is true.
A)For a foreign corporation to be a controlled foreign corporation (CFC), more than 40% of its voting stock, or more than 40% of the value of its outstanding stock, must be owned by U.S. shareholders on any day of the corporation's tax year.
B)Under the Subpart F rules, controlled foreign corporations (CFCs)are required to distribute a certain portion of their income as dividends to their U.S. shareholders.
C)When a controlled foreign corporation (CFC)earns Subpart F income, such income is considered to be a constructive distribution to the CFC's U.S. shareholders on the last day of the CFC's tax year, or the last day on which CFC status is retained.
D)All of the above are true.

Question

Quizplus · Accepted Answer

The correct statement is C, which accurately describes how Subpart F income from a CFC is treated for U.S. tax purposes. It is considered a constructive distribution to the U.S. shareholders on the last day of the CFC's tax year or the last day on which CFC status is retained, regardless of whether an actual distribution occurs.

Identify Which of the Following Statements Is True